What causes deals to fall through?

February 24, 2026

by a searcher from University of Texas at Austin in Houston, TX, USA

Hey everyone, It seems as though one of the things that causes the search process to take so long is that deals fall through in the process requiring searchers to start all over again. I’m curious to know some common reasons deals fall through to see if there’s a theme (to be able to identify deals likely to fall through earlier). Please share your experiences!

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Reply by a searcher
from Pepperdine University in Houston, TX, USA

Hi Femi, I never knew this before, but I discovered during the SBA loan process that both buyer AND seller have to be qualified by the SBA for the deal to be approved. So, if the seller doesn't qualify, that will kill the deal even though it's at an advanced stage.

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I would say the biggest reasons we see deals fall apart from a lender perspective are as follows: 1. QofE comes back showing some major discrepancies that change the cash flow and the buyer and seller fail to negotiate a change in price. 2. The financials of the business deteriorate post-LOI. This could be because the seller has taken their eyes off of the business while planning for a sale or because there is a change in the industry. But this can cause problems with the financing or a need to adjust price, and the seller might not be willing to make the adjustment. 3. Issues come up in contract negotiations related to Reps and Warranties, seller salary post-closing, disagreements on working capital adjustments, etc. 4. What I will call the "Out of Nowhere". There are situations where often the seller backs away for some surprise reason. I have seen these reasons be things like: a) they talk to their accountant and find out after taxes they are not getting as much as they wanted so they back out; b) the attorney is bad and talks them out of moving forward; c) they get a better offer and try to find a way to kill the existing deal; d) a friend or associate tells them they can get more for the business so they back out; and e) they just decide they are not ready to sell yet. There is are many other reasons I have seen deals not move forward, but the above covers the primary causes I run into. We do commercial lending and we rarely see a deal fail on our end due to a loan issue, but that is because we vet transactions pretty hard on the front-end. But that is a possibility if you are only using one lender or the wrong lender. If you have any additional questions you can reach me here or directly at redacted

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