Real Deal Breakdown: Why Transactions Fall Apart

Transcript

Andy and JT welcome you to another episode of The Deal Board Podcast. This week, they break down the real reasons business transactions fall apart and what buyers, sellers, and advisors can do to avoid them. They discuss how unrealistic expectations can create problems before a transaction even begins, and why the marketplace ultimately determines a business’s value. Andy and JT explore what happens when financials do not hold up during due diligence and how small inconsistencies can create bigger doubts. They also discuss why clear communication is essential to maintaining momentum and the issues that can slowly erode buyer confidence and derail a deal. Tune in to learn how preparation, communication, and realistic expectations can help keep a deal moving toward the finish line.

Listing of the Week:
Eric Straus of Transworld NY shares a virtual events business that can be operated from anywhere. The company provides remote team-building experiences for distributed workforces, including activities like cake pop decorating sessions hosted over Zoom. The business was started during COVID, has continued to grow, and is generating approximately $1.1 million in revenue with around $450,000 in seller’s discretionary earnings. The asking price is $1.3 million, including inventory. For more information, call Eric at (917) 719-5920 or email him at [email protected]

Deal of the Week:
Eli Tatem of Transworld Western Carolinas shares the sale of a machine shop that had been operating for around 20 years. The seller had originally worked for the founder before buying the business himself and running it for about nine years. The buyer was a husband-and-wife engineering team with relevant industry contacts and the ability to grow the company through existing manufacturing relationships. The deal closed at around $250,000 with the help of an SBA loan through a local Greenville-area lender. For more information, call Eli at (864) 527-5995 or email him at [email protected]

Key Takeaways

[00:00] Outline of today’s topic: why business deals can fall apart.
[01:19] Learn how unrealistic expectations can hurt a deal.
[04:02] Hear how expectations around timelines create problems.
[05:45] Understand why financial inconsistencies can damage buyer trust.
[08:22] Discover why communication is essential to keeping deals alive.
[10:29] Why sellers should prepare key documents before making an offer.
[12:33] Listing of the Week: Eric Straus (Transworld NY) is selling a growing virtual events business with strong margins and location flexibility.
[14:27] Explore why owner dependency can become a major red flag for buyers.
[17:37] Uncover how decision fatigue and emotion can affect buyers and sellers.
[22:09] Deal of the Week: Eli Tatem (Transworld Western Carolinas) sold a long-running machine shop to a husband-and-wife engineering team.

Show Notes

“One inconsistency, one thing that is not correct, can make the buyer doubt the whole deal.” — Andrew Cagnetta [0:05:58]

“Deals don’t collapse overnight, – it’s a slow fade.” — JT Tatem [0:09:57]

“If you have the ability to show everybody how your business is operated and you have an operational plan, I think that could go a long way.” — Andrew Cagnetta [0:17:09]

“Buyers, sometimes, they hesitate because of risk.” — JT Tatem [0:19:38]

“We know that many deals don’t fall apart just because of numbers. They fail because someone else feels uncomfortable making that final decision. ” — JT Tatem [0:21:50]

Mentioned in This Episode

• The Deal Board Podcast
• Subscribe to The Deal Board Podcast YouTube Channel
• United Franchise Group
• Transworld Business Advisors
• Transworld on LinkedIn
• Transworld on Facebook
• Eli Tatem at Transworld Western Carolinas
• Eric Straus at Transworld NY