Why Deals Fall Apart

Time kills deals. Here is how it happens, and how to keep yours moving.

Most deals that die do not die from a single bad fact. A buyer rarely walks because of one finding. They walk, or retrade, or quietly lose interest, because the process dragged, the information came slowly, the numbers kept changing, and somewhere along the way the confidence that made them sign the letter of intent drained out.

Bankers have a phrase for this: time kills all deals. It is true, and it is worth understanding why, because almost every cause is preventable.

Everyone Has a Day Job

A sale process is a second full-time job layered on top of a company that still has to operate. The CEO has customers. The controller has a month-end close. The head of operations has a plant to run. None of them were hired to sell the company, and none of them have done it before.

The advisors are busy too. The investment banker is running three other processes. Outside counsel is in the middle of another closing. The buyer’s diligence team is working two deals at once. Each party assumes someone else is driving, and each request sits in an inbox for four days before it gets a response. Multiply that across two hundred diligence requests and a process that should have taken ninety days takes six months.

Momentum is the deal’s most perishable asset. Every week that passes without progress gives the buyer time to find another target, gives a market or a lender time to move, and gives someone on either side a reason to reopen a term that was already settled.

The Business Falls Off While the Owner Is Distracted

The second way time kills a deal is quieter. The owner, consumed by the process, stops running the company. Pipeline reviews get skipped. A key customer does not get the attention they were used to. A pricing decision gets deferred until “after the deal.” Hiring stalls because nobody wants to explain a new head to a buyer.

Three months in, the trailing twelve months of EBITDA that the price was based on has started to slip, and the buyer, who is watching monthly results throughout diligence, sees it first. Now the seller is defending a number the business is no longer producing. That is not a diligence problem. It is a distraction problem, and it costs sellers more purchase price than any accounting issue.

The Numbers Are Wrong in the CIM

The confidential information memorandum is the buyer’s first detailed look at the company, and every figure in it becomes a promise the seller will be asked to keep. When the CIM is built from unreconciled management reports, or from a P&L the controller adjusted by hand the night before it went to the banker, the promises are made on shaky ground.

The buyer’s team ties the CIM to the general ledger, and when it does not tie, the conversation shifts. It is no longer about the strength of the business. It is about why the numbers do not agree, what else might be wrong, and whether management understands its own financials. A single restated figure changes how every subsequent number is received.

Information Takes Too Long

Once diligence begins, the buyer’s advisors issue a request list, often hundreds of items, and the pace at which those get answered is the pace of the deal. A seller with a finance function that runs on reconciled data and connected systems can turn most requests in a day. A seller whose reporting lives in one controller’s spreadsheets takes two weeks to produce an AR aging that agrees to the balance sheet, and the buyer’s team spends those two weeks wondering what the delay means.

The buyer reads speed as competence. Slow answers do not just extend the timeline. They lower the buyer’s confidence in what they eventually receive.

The Buyer Cannot Get Comfortable with the Books

This is the cause sellers underestimate most. It is not that the buyer finds fraud, or even a material error. It is that the books do not behave the way a well-run company’s books behave, and the buyer’s team cannot get comfortable.

Margins swing eight points from month to month with no operational explanation, because revenue and cost cutoffs were never consistent. Financials are on a cash or hybrid basis and the accrual conversion produces a different EBITDA than the one in the CIM. Revenue recognition was never formalized. Balance sheet accounts have not been reconciled in a year. Intercompany balances do not agree.

A buyer’s diligence team does not need to prove the earnings are wrong. It only needs to conclude that it cannot prove they are right. “We couldn’t get comfortable with the numbers” is how deals end without anyone being able to point to the problem, and it is how a price gets cut by a full turn of the multiple to cover uncertainty that clean books would have eliminated.

There Is No Leader in the Finance Department

Underneath every one of these causes is the same gap. The owner knows the business cold: the customers, the operations, the people, the market. What the company does not have is someone who knows the financial side of a transaction and has the authority and the bandwidth to run it.

The controller is capable but has never been through a sale and is trying to close the books at the same time. The banker is managing the market, not the data room. Counsel is drafting the agreement, not building the working capital schedule. Nobody owns the financial workstream end to end, so it moves at the pace of whoever is least busy that week, which is nobody.

The result is a moment most sellers remember vividly. The buyer’s team has just sent a follow-up on a question that was asked three weeks ago, the banker is asking why the June numbers changed, and the owner realizes there is no one in the building who can answer either one with confidence. Every owner who has been through it knows that moment. Most describe it with a word we cannot print here.

How Buxbaum Keeps the Deal Moving

Buxbaum’s role in a transaction is to fill that gap and keep the deal from losing time. We take ownership of the financial workstream from preparation through close.

Before launch, we prepare the sell-side quality of earnings, tie every figure in the CIM to the ledger, build the working capital analysis, and assemble the databook so that the request list is largely answered before it arrives. During the process, we run the data room, field buyer requests with same-day turnaround where the data allows, defend the adjustments in diligence calls, manage the working capital negotiation, and coordinate the financial definitions in the purchase agreement with counsel. Throughout, we keep producing current monthly results so the owner and the banker see any slip in performance before the buyer does.

For companies whose accounting we already run, most of this is a byproduct of how the finance function operates every month: reconciled balances, connected systems, automated close, reporting that ties. The books are already the books a buyer expects. For companies coming to us ahead of a process, we start by finding what a buyer will find and fixing it on the seller’s timeline instead of the buyer’s.

The point is not just a cleaner deal. It is that the owner gets to keep running the business, which is the thing that protects the number the deal is priced on.

The Bottom Line

Deals fall apart when they slow down, and they slow down for reasons that have almost nothing to do with the quality of the underlying business. Nobody is driving. The owner is distracted. The numbers in the CIM do not tie. Information takes weeks. The books are not the books a buyer expects. And there is no one on the seller’s side whose job is the financial side of the deal.

Every one of those is fixable, and every one is far cheaper to fix before a buyer is in the room. If a transaction is in your future, the time to put a finance leader on it is before the process begins. Let’s talk about where your financials stand today.