Even with strong interest, solid financials, and verbal agreement on terms, M&A deals can and often fall apart before reaching the finish line. Sellers and buyers often leave frustrated by what looked like a “done deal” that unraveled quickly, even days before closing.
However, many of the common pitfalls are preventable with the right preparation, communication, and mindset. Here are some of the top reasons good deals collapse and what you can do to avoid them.
1. Surprises During Due Diligence
Buyers expect to verify everything they’ve been told about your business and more. So when diligence reveals inconsistencies, gaps, or unexpected risks, it can shake their confidence. Whether it’s incomplete financial records, hidden liabilities, off-the-books arrangements, or customer concentration concerns, surprises can lead to renegotiating the deal or walking away altogether.
How to avoid it:
Be proactive. Before you go to market, perform internal diligence. Work with your advisor and CPA to clean and organize your financials, normalize your EBITDA, document key contracts, and resolve any outstanding legal or compliance issues. Transparency builds trust and keeps momentum going.
2. Unrealistic Expectations Around Valuation or Terms
Sellers naturally want to maximize their exit. Oftentimes, though, pricing expectations are far above market comps and an unwillingness to flex on terms creates friction that derails negotiations.
How to avoid it:
Start with a clear, data-backed valuation and understand how buyers underwrite deals. Listen to feedback, and know where you’re firm and where you’re open to compromise. An experienced M&A advisor can help set realistic expectations and navigate the deal structure in a way that works for both sides.
3. Lack of Buyer Readiness or Commitment
Not all buyers are created equal. Some come to the table without secured financing, internal alignment, or a full understanding of what is required to close a deal. Others explore multiple deals and lose focus or shift priorities mid-process.
How to avoid it:
Qualify your buyers. Confirm they have capital (or financing lined up), deal experience, and a timeline that aligns with yours. Vetting buyers early ensures focus on serious parties who are ready to transact.
4. Poor Communication Between Parties
Even the most promising deal can stall when communication breaks down. Misunderstandings about roles, delays in information sharing, or legal teams that escalate minor issues can erode trust and slow progress. Occasionally, this leads to a complete breakdown in the deal dynamic.
How to avoid it:
Keep the lines open. Assign clear points of contact, respond to requests promptly, and stay collaborative, especially as negotiations intensify. Having an advisor serve as a buffer and facilitator can also help maintain a steady, professional tone throughout the process.
5. Deal Fatigue
M&A transactions take time, and both sides can grow impatient. If diligence drags, legal issues pile up, or negotiations become overly complex, deal fatigue sets in. This can lead to emotional decision-making, abrupt walkaways, or missed opportunities to close the gap.
How to avoid it:
Stay focused on the end goal. Set clear timelines, manage expectations, and maintain momentum wherever possible. Deal fatigue is often a symptom of poor process management, which is why having an experienced advisor involved from start to finish is so critical.
Final Thoughts
The path to closing is not always linear, but many deal-breakers can be avoided with the right preparation and mindset. By anticipating issues before they arise, maintaining clear communication, and working with experienced advisors, sellers can dramatically improve their odds of getting from a letter of intent to a signed purchase agreement.
Jason Sanders | Managing Partner
517 206 7464