After spending years to build, manage, and finally prepare a company for sale, business owners commonly sense a feeling of relief when they finally agree on principal terms of a transaction. Often, they imagine a smooth path to the ‘finish line’, the closing date. However, frequently there is a series of late-stage roadblocks that can shift a situation from calm to chaotic, causing unrest, sometimes even panic, among Sellers. Insight on these challenges can better arm professionals to evade potential dealbreakers.
This observation was made by Stevens & Lee, who noted that while the closing date often seems the easiest stretch of the transaction process, it often contains unexpected and significant hurdles.
What are the most common late-stage issues, and how can they be avoided? The following is not an exhaustive list, but it lays out some of the principal headaches that often arise.
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First, there’s due diligence. While it’s a typical part of any transaction, it has been known to surface issues such as undisclosed liabilities or other potentially deal-derailing problems.
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Transaction documents are crucial in any deal, but they can also pose a challenge if terms and conditions are not clearly defined and understood by all parties involved.
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Thirdly, regulatory approvals can be a common late-stage roadblock. Depending on the nature of the business, there can be industry-specific regulations that may affect the successful finalizing of the deal.
Remember, every business transaction has its unique set of complications. Understanding the most common late-stage roadblocks and putting plans in place to avoid them can help ensure a smoother journey to the finish line.