What are the most common reasons a deal doesn close?
The number one reason a transaction is not completed is weakening financial performance. If the financial performance of a seller is off materially from the original forecast, the business loses value. For example, if attrition of customers increases or gross margins decrease, the business loses value. Therefore, we always emphasize to sellers the critical importance of maintaining the business and continuing to actively grow it as if they’ll continue to own it for at least another couple of years. The number two reason deals fall apart is due to surprises popping up during due diligence. That is why LVI works closely with you to prepare for due diligence prior to showing the Information Memorandum to any prospective buyer. We want to find any problems before the prospective buyer does, to be prepared to fix the problems and to be comfortable the problems will not become opportunities for the buyer to renegotiate price or terms. We work with both parties during a transaction to ensure
