Avoiding the Deal Close slow march of death...

October 10, 2023
by a searcher from Brigham Young University in Kahului, HI, USA
Aloha,
Curious about tactics or terms that help avoid letting deals drag out into perpetuity during due diligence?
Our LOI's generally have some dates and "outs" related to those dates, but it has been challenging to create dates or deliverables that help push a deal towards close. Any best practices?
from Princeton University in Annandale, Clinton Township, NJ, USA
It will always be a challenge to "speed up" the seller's responses. The only effective an honest way I've found to keep deals on track in the past is to make it very clear that once and LOI is signed, you will be spending significant resources (time and money) to complete legal and financial due diligence. So if at any point the Seller gives the impression that they are not equally invested in pushing towards a closing, I'll have no choice but to pull the plug on the deal since I couldn't invest those limited resources unless there was a clear path to closing a deal. Might sound like a threat, but it is the honest truth--try to set that expectation clearly before signing an LOI.
The ^redacted to address your question, I think you can make the same point in reverse. You are busy running a business and the sales process takes time and focus away from that. If you are working with a serious buyer, they should be SPRINTING once an LOI is signed to get DD completed. This not only saves both sides time and money, but it minimizes the window where your Company's owner isn't 100% focused on the day-to-day of running the business. Again, setting clear expectations prior to LOI close is key. And making sure both sides have legal, accounting, and tax advisors hired (basically confirming that both sides are ready to invest their money) once the LOI signed is the best way to keep timeline on track from LOI to close.
from University of Memphis in 5000 Linbar Dr, Nashville, TN 37211, USA