Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

August 8, 2016

Deals That Fall Apart

By Joseph Eneldas


Once an investor has reviewed the prospectus and met with the business owner, and both parties have agreed upon an offer to purchase, the deal is 90% done, right? Wrong!

“We frequently see business owners and business buyers feeling somewhat relieved once an offer has been agreed upon,” says Achim Neumann, President of A Neumann & Associates, a New Jersey based mergers & acquisitions and business brokerage firm.  “However, this is not the time to sit back and rest; as a matter of fact, most of the heavy lifting is still to come.”

Let us take a look at why deals fall apart. There are essentially three ”categories” to which we can attribute a failed deal:

  1. Poor business preparation and organization on the seller’s part, mostly a lack of financial organization, and missing legal, administrative and environmental matters;
  2. Buyer’s lack of lending resources; and
  3. Seller’s (or buyer’s) remorse

As we have discussed in previous newsletters and published articles, business preparation is a crucial success factor for completing a deal. This includes maintaining a functioning, up-to-date financial reporting system, close linkage between financial and operations systems, and the organization and availability of all legal and administrative documents.  Depending on the industry, this also includes obtaining and maintaining the required environmental certificates.

“Needless to say, if any of these elements are missing, it will not only slow down the process, but it will also engender buyer mistrust — and ultimately kill the deal,” says Frank Arcoleo, Managing Director.

A second factor that could come into play, albeit not that often, is the buyer’s failure to obtain bank financing.  For one reason or another, the buyer might not have provided his/her complete financial picture during the pre-qualification process.  All of the sudden, the bank discovers these omissions and refuses to lend in what appeared to be a perfect deal.

This may come as a surprise, but by far the most significant factor in deals that fall apart is seller’s remorse. This manifests itself by a loss of momentum, phone calls not being returned by the business seller, or when requested due diligence documents are simply not provided on time, or at all.

“It’s generally not the price or terms of the deal that cause seller’s remorse, but most often it’s an emotional issue,” says Achim Neumann. “The seller gets cold feet and sometimes, due to personal reasons (like not having thought about what to do after the sale!), he or she begins to sabotage the deal.”

Other seller motivations come into play, too, like not being ready, or having the time, to provide the requested due diligence documents.  In other cases, it can be simple old fashioned greed as sellers want to increase the price – or may not want to sell the company at all anymore – as the result of some positive upswing in sales or profits.

Buyers, on the other side, are more cut and dried: typically, they realize fairly fast if they want to proceed with a business acquisition, and if the requested due diligence information is consistent with the information presented in the prospectus, they will go forward with the deal.

A highly qualified M&A firm is well-positioned to guide the business seller and buyer through the due diligence and deal closing processes; however, if there a “second agenda,” then the process can be quite daunting.

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or

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Andrey O, Investor

“Finally enjoying retirement after recently selling my business using the services of A Neumann & Associates. Joe Oddo provided the conduit to a successful transaction. Joe knew when to inject input and when to simply listen and allow the buyers to vent, step back and regroup. The outcome met our expectations and got us to the finish line, which included my staying with the company six months in order for the buyers to get their footing and keep our workforce in the loop. He helped at every step by providing his expert guidance & resources. Thank you!”

Emily Parker Myers, Co-Owner - Myers McRae

“I had been in touch with Karin and Gary from A Neumann & Associates regarding some opportunities and was looking forward to meeting with them. Hence, when they organized a seminar in Princeton, NJ, I was quick to sign up. The seminar was very informative as the team walked the attendees through various scenarios and referenced real life buying/selling situations they had been through. The sessions by Gary, Karin and Achim were crisp and focused and brought clarity to potential seller and buyers. I strongly recommend the team and look forward to continue working with them.”

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“Thank you for your Event on "How to value, Sell, and Buy A Business for Maximum Profit" and the insight into ANA’s approach on what is involved in the Business Exit for sellers. Garys Hervieiou's "Business Valuation", Achim's "Deal structure" presentation and Karin’s "Preparing the Package" are real street knowledge shared. They answered attendees questions which makes it more interesting for learning from others. Great for small businesses like us. The presentations were totally worth our time and travel for the event to Princeton, NJ from Rockville MD. Ravi Bhutani, President, CIPS”

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“Gary, this is to thank you for an excellent job done in selling our business. We could never have done it without your professional expertise, dedication and time put in without reservation to make it happen. We will gladly and highly recommend you to anybody in our position.  It was a pleasure to work with you.”

Pat Iammatteo, Owner

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Eric H., Investor

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Marc, who explained the process in detail. After meeting with Marc in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using to sell my business for max value. Working with Marc at A Neumann & Associates was very easy and professional. I did not know all that was going to be involved in selling my business but they helped me through the process. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. I highly recommend this firm to anybody who wants to sell now or down the road. Marc not only knows his stuff, but actually is a real nice guy.”

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