There can be numerous reasons that a company is not sold. And some of them have little to do with the company itself. Even the most capable investment bankers and lawyers can fail to put Humpty Dumpty back together again.
Following are the major impediments to your company consummating a sale transaction.
- Seller not really committed to the sale, so "good" offers are not good enough.
- Misunderstandings of what is stated in the Letter of Intent (LOI) and the ultimate Purchase Agreement. These can be large items. However, usually they are minor and trigger some negative emotional reaction from the seller.
- Private Equity cannot leverage their investment with enough bank financing.
- Upon the due diligence by the chosen buyer, the financial metrics do not match what was initially presented. Sometimes this discrepancy can be resolved, usually via a lowering of the multiple.
- Buyer(s) gets sidetracked on another, "better" deal.
- Buyer(s) suddenly get "cold feet" and cannot move forward.
- Gross and profit margins are below industry standards.
- Actual customer concentration.
- Management team presents poorly or cannot answer specific questions posed by buyer groups.
- Personalities of one or more on the seller team do not mesh with the buyer's designated supervisory personnel.