Although everyone knows the saying “If at first you don’t succeed, try, try again,” you may not think about how it applies to exit planning. However, in a business transaction, it is not unusual for one of the parties to walk away from a proposed deal. It may occur during initial discussions, prior to or after receiving the letter of interest or intent, or while negotiating the purchase price agreement.
It is often better for everyone if this is done early in the negotiations rather than at the end when significant time, effort, and professional fees have been incurred. But if the deal isn’t right, it is always better to cut your losses and move on.
However, a transaction that is unable to close does not necessarily mean that it is a failed transaction. Lessons may be learned in such an instance that may lead to another opportunity with a new party or, perhaps, the original party may reappear after any identified issues or concerns have been rectified or diminished. I have been involved in multiple situations where a transaction appears to be progressing smoothly, headed for closing, and then it hits an unexpected snag. One or both parties may decide to hit the pause button and terminate the agreement. Both parties are typically frustrated, likely disappointed, and possibly angry, but both leave the process with additional knowledge and insight that they may bring to the next opportunity when it arises.
Whether you are a buyer or a seller, it is important to keep an open mind and understand the emotional weight and personal toll that working on a transaction brings to your life and those close to you. Buying or selling a business is personal and it can be stressful. We are not robots, and certain transactions and events can weigh on and affect each of us differently.
After working on a transaction that doesn’t close, it may be better to step back, take a deep breath (as my mother used to say), and reevaluate what you have learned. Perhaps it was the selling price, the deal structure, tax implications, or other perceived deficiencies in the business that resulted in the two sides being unable to attain a signed agreement. Having a clear understanding of the obstacles to closing the deal is key to determining your next steps. Whatever the reason, no problem is unsurmountable when reasonable people work for a common goal. It’s not unusual for a buyer who has walked away from a transaction to reengage in the process.
Your professional advisors can guide you through the process and their experiences with other transactions can lighten the emotional load. They understand the highs and lows that are common in transactions and can help you navigate the process while maintaining your sanity.
Remember, exit strategies are more of a marathon than a sprint. The right transition may take time to get it right, and although it may not work out the first time as planned, keeping your eye on the prize may enable you to win it the next time. Persistence and patience are your friends and “if at first you don’t succeed, try, try again.”
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