Deals that drag on and never close can be a frustrating and disheartening experience for all parties involved. This was certainly the case for a deal that we worked on for months, only to have the buyer drag the process out for an additional 9 months.
The due diligence phase was the first indication that the buyer was not fully committed to the deal. The buyer kept requesting more and more information even after the 30 day due diligence period had expired. This slowed down the process and added unnecessary delays. Additionally, the buyer wanted to renegotiate the price of the business, citing various reasons such as market fluctuations and the changing valuation environment.
The buyer’s lack of financial resources also became a major issue. They had to rely on investors to provide funding for the deal, and the investors mandated that the buyer keep digging for information, even if it didn’t make much sense. This further delayed the process and added to the frustration.
The buyer also made excuses on behalf of the bank and the investors, stating that they were the ones pushing for additional information and delays. This was frustrating as it seemed like the buyer was not taking responsibility for their actions. As per the buyer, the investors wanted the buyer to speak to the employees and the clients, which is a big no-no before the closing.
The final straw came when the buyer again wanted to renegotiate the price due to interest rate increases, even though the company was projected to increase by 25% in 2023. And this was 10 days before closing. It became clear that the buyer was not serious about the deal and was only using it as a bargaining chip.
In conclusion, deals that drag on usually never closes. In this case, the buyer’s lack of commitment, reliance on investors, and constant delays ultimately led to the deal falling through. It’s important for all parties involved to communicate effectively, be transparent about their intentions, and have a clear understanding of the terms before entering into negotiations. In hindsight, since the company increased their top and bottom line, we were able to market the company for a higher asking price. We at GillAgency never get discouraged and are always optimistic as it encourages our clients as well.
