When buyer and seller come to a meeting of the minds and they “go under contract,” the road to closing begins. It’s at this time that we always warn both sides that there could be some bumps along the way. We don’t say that to rain on their parade, after all, it’s a happy time. The buyer has gotten their offer accepted, and the seller is excited to have found a buyer for their business. This is where the Due Diligence period begins, and the hard work starts. The process of going through Due Diligence, getting the buyer’s loan approved, or getting the buyer a new lease on the premises can uncover a number of issues that we could have never predicted or even prepared for.
As business brokers, we do our best in the beginning to make sure we have a qualified buyer or we get all of the facts about the business from the seller, but we cannot possibly know what we don’t know or try to guess where things might fall apart. So, where we really earn our stripes is working through the challenges, issues, and problems that do come up during the course of taking a deal from contract to close. We call it “Deal CPR,” and these are our tips on how to overcome the speedbumps that we hit along the road to the closing table.
Keep Calm & Gather Facts
The business sale process is not always smooth sailing, and everyone has to be prepared to face some challenges. However, it’s human nature to react with emotion when something unexpected comes up or something negative arises during a process that we are hoping goes smoothly. The best advice we can give to buyers and sellers here is to remain calm and try not to react emotionally. Most issues that arise can be worked through or sorted out. The first thing we need to do is to gather all of the facts, so that we know exactly what the situation is. If we don’t have all of the information, how can we possibly start to brainstorm ways of overcoming the problem? So, the first thing we as business brokers do is to speak to all parties involved to figure out exactly what the issue is and get as much information surrounding the problem as possible.
Explore Options and Solutions
Once we have all of the facts and all of the information regarding the issue at hand, then we can start to figure out what options there are for overcoming the issue or solving the problem. Often times it is something very simple, that could even be covered in the Asset Purchase Contract or a quick clarification from the seller. Sometimes the issue requires a more creative solution that we need to craft and add into the agreement.
I wish there was a way we could have standard fixes for the issues that do arise, but because each business that we sell is so unique, the problems that are uncovered through the process are always different and will vary greatly from business to business. That’s why it’s super important to work with a professional business broker, who has experience, knowledge, and more importantly, resources. Often times on our team at Green & Co, when one of our brokers has had an issue come up during a deal, we all put our heads together to come up with possible solutions, because we all have different backgrounds and experiences, and being able to think outside the box in these situations is key. Remaining open and flexible to things possibly changing or looking different than the original agreement between buyer and seller will help everyone move on to the next step.
Moving Forward
Once we have all of the possible solutions or options for solving the problem at hand, we will present them to the buyer and/or seller. We will then work to help both sides come to an agreement about how we can overcome this speedbump and keep moving forward towards closing. Of course, we aim to work towards a solution that all parties are happy with, because without that, we probably won’t get to the closing table. Most of the time we are able to come up with a fix or a compromise that works, where everyone is happy, and we can keep moving forward. Sometimes, whatever the issue is cannot be overcome, or the solution isn’t acceptable to one or more of the parties, and then the Contract is cancelled. That is of course not the outcome that we were all hoping for, but in some situations, it’s definitely for the best. As business brokers, we genuinely want the very best for all of our buyers and sellers, and we work hard to ensure that all parties walk away from a transaction as happy as possible.