Every business sale is a minor miracle. Just as the skydiver gently times his pirouettes and turns in his parachute to land precisely within the giant X of his landing zone, so too do all parties aim at completing what needs to be done from the time an LOI is signed to the date a deal is set to close. Think about all the people involved.
The seller has been given a great deal of paperwork to complete for the buyer’s due diligence. If he/she has been preparing well to sell a business, this may simply be a matter of looking things up and filling in blanks.
But, if those systems aren’t in place, there’s going to be a lot to do. The seller has to form a company and work out contracts with new employees and/or investors. He has to line up the money, which may involve both the SBA and a bank. Speaking of which…
Loan committees don’t meet every day. They meet every couple weeks – sometimes more frequently, sometimes less, but at those meetings, the banker representing you needs to have a substantial amount of paperwork in order to represent you well. And who is going to get all that paperwork done? You, the buyer.
The seller and the buyer will both be working with attorneys in order to make sure deal points are handled in a thoughtful and diplomatic way so as to preserve amity and keep the process moving forward. These meetings may be contingent on items mentioned above. Did we mention paperwork?
This is all to say that if everyone is aiming towards a date, and then there’s suddenly a delay, it’s a lot like a sudden stop in traffic when you’re driving a car. Your muscles tighten up and your senses are on high alert. In the case of a closing sale delay, the question immediately posed is: Why is there a delay? If you don’t have a good answer to this question, a deal could go away. Why?
For the seller, the concern might be, “Hang on, this person wants to buy my business, and he/she can’t get the paperwork done? Is this deal even real?”
For the buyer, the concern might be, “Whoa, is this person hiding something from me? Can I trust the documentation I’ve gotten so far?”
The best course, as always in this business, is disclosure. Be upfront about why there is a delay, explain what you are doing to correct it, and then hit the target. The minor miracle of hitting a business closing date? That miracle is enclosed in a bubble of trust. The bubble might be able to take a hit – even two – but, you know what they say about third strikes…
Here at Apex we always ask you to keep your lines of communication open with us. Whatever is on your mind throughout the process feel free to share. We want to cross that closing date finish line with you, so you can move on to what’s next!