How to Know When a Buyer is Backing Out of a Business Purchase

Securing a buyer for your business isn’t just about getting an offer. You still have to walk them through the deal.

Depending on the contingencies in your offer, they could get out if they find another opportunity or get nervous. Fortunately, there are steps you can take to protect your deal. But, to take those steps you have to be able to identify when a deal is going south early on. 

With years of experience, it’s easy to read the tell-tale signs. 

1. An Inspection or Valuation Goes Poorly

If your business isn’t as it seems at the time an initial offer was made, it’s going to affect your ability to achieve a high final sale price. Try not to mislead potential buyers and provide them with accurate and fair inspections and valuations. 

While it might make you happy to see an inflated offer on the table, the deal will likely fall apart during the due diligence phase. 

2. The Buyer Doesn’t Know Your Industry

If a buyer is entering a new industry for the first time and doesn’t know what they are getting themselves into, they might back out of the purchase more easily.

The best thing you can do to combat this deal-destroying force is to educate your buyer as much as possible on your industry and the business processes within it. The more informed your buyer, the more confident they will be in their purchase. 

3. The Offer is Full of Contingencies

Some buyers try to load their offers down with contingencies as a means of protecting themselves. They want to have the opportunity to cancel at any time.

When I work with buyers, I put the proper contingencies in place to protect their interests, but I don’t like to leave the deal open to the point where they can feel like they can walk away for no reason at any point. 

Deals like sellings a business require the effort of many people working together as a team. It’s fair to all of the members involved in the process to only enter into dealings when you’re sure you’re ready to make a purchase. 

4. They Haven’t Asked Anyone to Review Their Offer

If someone is taking their business purchase seriously, they will often hire experts like accountants, appraisers, business brokers, lawyers, and even real estate agents to review the details of the proposed offer. 

If your buyer isn’t doing their due diligence, it may be because they’re reconsidering their decision. It may be time to step in and offer them more information.

5. Their Financing Isn’t Going Through

The simplest reason a buyer may back out from a contract is if they are having trouble securing their finances for the purchase. This can be heartbreaking for an owner who has worked hard to put together a fair deal.

That’s why it’s so important that you vet your buyers for fund availability long before you enter final negotiations.

6. They Are Still Considering Other Businesses

The old adage that the grass is always greener is true in business sales as well. People are always looking for the next best option. 

Be sure you set a closing date for your contract and ensure you maintain contact with the buyer throughout the purchase process. Answer all of their inquires thoroughly and promptly. Don’t leave anything to chance.

7. They Keep Pushing the Closing

Pushing the date for a closing could be just a simple issue of poor timing, or it could be a sign of a larger issue. Often times buyers will push a closing if they are having trouble securing financing for their purchase or getting cold feet. 

When that happens, it’s important that you seek out a professional who can help you plug any holes and seal the deal quickly. 

For Help Selling Your Business

Dealing with a potential buyer who is sending signals that they may back out of the deal is stressful as an owner. You are doing everything you can to ensure the sale goes through, but, sometimes that isn’t enough.

As trained business brokers, we have the experience necessary to notice when it seems like a buyer may be backing out and can take steps to reinforce the purchase before the deal falls through. If you’re having trouble bringing your buyer to the signing table, contact us today for help.