Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

August 7, 2014

What Could Possibly Go Wrong?

By Joseph Eneldas


We’re often asked – most often by people who are looking to do business with us – what are the worst things we’ve seen happen in the M&A world.  We all have our experiences and our stories, but two major ones always make it to the top – the buyer with no money and the seller with no time.  In this installment, we’ll talk about the former.

The buyer with no money scenario is probably the most frequent problem we hear about from business owners who have attempted, unsuccessfully, to sell their businesses without a broker.  The story begins like this:

The owner, seeking to avoid paying broker commissions, starts sending out discreet inquiries to his business cronies and at the same  looks on-line for listings of buyers looking to make acquisitions.  The cronies ask other business associates if they know of anyone interested in such-and-such type of business (without divulging names), and the word gets out that somebody in a certain industry in a certain geographical location might be looking to sell.  Meanwhile, the seller may or may not find potential buyers on-line who are looking for companies like his.  At any rate, one or more of these activities turns up an interested buyer candidate, and he and the seller meet to discuss a potential deal.  The buyer seems to be a good guy, polished without being slick.  “Not surprisingly, the buyer assures the seller that he has plenty of money to do the deal, not to mention numerous banking contacts that can complete the financing easily,” says Achim Neumann, President of A Neumann & Associates, a New Jersey based M&A Advisory and Business Brokerage firm.  “The seller may be a bit concerned about the financial wherewithal of the buyer, but feels that any attempt to force the buyer to prove that he has the liquid funds would create ill will that would negatively influence the offer or kill the deal entirely.”

The process of finding one or more candidates and coming to some agreement can take weeks, but more often, months.  Hashing out the details of the agreement can take some more months.  But ultimately a deal is reached and the parties plan to close in another month or two.

The papers are drawn up, and the closing date is scheduled.  At the closing, however, there is a problem.  Something has come up with the buyer, and he “no longer” has the liquid funds for the down payment.  In addition, the bank financing hasn’t come through.  The buyer still wants to buy the business, though, so he asks the seller to provide financing to complete the deal.  What would you do?

There are two variants to the “buyer with no money” scenario. In one, the seller cries, “Wait a minute.  You want to buy MY business with MY money?  No way!!”  So the seller calls off the deal.  Some time and money has been wasted, but perhaps he can just start the buyer search process over, right?  Yes, but not so simple.  Over the months of inquiry and discussion and negotiation with cronies, lawyers, and potential buyers, many people have gotten an inkling that the business might just be up for sale.  The best, key employees, and the largest, most important customers, may hear about the pending sale and start looking for alternate, less risky employers or suppliers.  Business performance is in serious jeopardy.

In the other variant, the seller, not wanting to waste all the time and effort he has already put into the deal, says “OK” to the seller financing and the deal goes through.  Whew!  Dodged that bullet, right?  Yes, but perhaps only temporarily.  Many buyers, even those without serious financial “skin in the game,” do well initially as past momentum carried the successful business forward.  But if problems occur – loss of key customers or staff, or changes in the industry – the new owner may not have the proper skills or incentives to right the ship or weather the storm.  “So many deals that rely heavily on seller financing wind up with the business returning to the seller,” says Michael “Mick” Feite, Managing Director Eastern PA.  “But the business that comes back isn’t the business that was sold.  It’s smaller, less successful, more risky – often about to collapse!”

Without a buyer with money and legitimate financial backing, no business deal makes sense.  Only a miracle prevents a disaster.  Most often, the seller at least wastes serious amounts of time and effort – and perhaps money.  At worst, the seller loses everything. This is precisely the reason a “mediating” business broker is needed in the transaction in order to perform the pre-qualification.

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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Client Testimonials

“ I appreciate your diligent approach to screening buyers and sellers as well as the high quality CIM that you produce.”

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.”

Gaurav Tyagi

“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”

Ravi Bhutani

“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

“Your vetting is simply outstanding, among the best I've seen from a broker.”

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.”

Double Diamond

“Used A Neumann & Associates to sale my business. could not imagine having done it with out the patience and experience Gary provided. Thanks Gary,”

Dennis Frazier

“Working with Marc and his company was a pleasure. 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. Marc handled most of the interaction and he has one of the greatest demeanors. Again, it was a pleasure working with him and his firm.”

Douglas DiCeglio

“I recently completed an acquisition using A Neumann & Associates. Tony Valentino was very helpful and accessible during the entire process. They do a thorough job vetting both parties and got us to the finish line.”

Srini Mudambi
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Contact A Neumann & Associates, LLC

If you are considering selling your business, please contact us to learn more about our comprehensive service spectrum. Our experienced professionals will answer all your questions about selling a privately held business in complete confidentiality. Please fill out our contact form, or call us at 732-872-6777. We will contact you directly and will never identify ourselves to your employees.

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