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How to buy a business: Closing the deal

Negotiations can stall and even collapse, even at the very last minute. How do you get the deal over the line and when should you consider walking away.

Closing the deal is the final and most exciting step of all.

After all the negotiations and trawling through so much documentation, you’re nearly ready to get the keys to your new premises.

But there can be last-minute hitches. Rarely, the deal can even collapse just when a deal seemed close.

So how do you prevent the deal from slipping through your fingers – and is it ever wise to walk away at such an advanced stage?

Bringing it all together

There are a few things to remember as you try to finalise the purchase:

Set a firm time period

There is nothing more frustrating than a deal that drags on for months on end.

Make it clear to the seller that you would like to finalise everything by a certain date – although be flexible, within reason, as to what that date should be. This reduces the risk of things drifting – there’s nothing like a deadline to inject urgency into proceedings.

Keep things moving forward

Unless there is a reasonable explanation for any delay, don’t let the process stall. Never think you’re being too pushy by reminding the buyer of an impending deadline.

Keep building trust 

Don’t do anything to damage the trust you’ve built throughout the process. Until the final contract is signed, the seller can still back out.

Think before you speak 

By this point, you are probably well acquainted with the seller – but keep things professional and follow best practice, under the instruction of any advisers you’ve appointed.

Don’t be afraid to ask questions 

By now, you may feel like you’ve asked so many questions that there can’t possibly be anything left to ask. But if you have any doubts at all, don’t be afraid to ask for clarification on any issue, big or small – buying a business is too big a commitment not to.

Look out for warning signs

Until the final sale agreement is signed, you should always be prepared to walk away – no matter how many months you’ve invested in the process, and however much you’ve set your heart on the business.

If something doesn’t smell right, then you should at least reconsider your commitment to proceed.

Here are some due diligence problems that should prompt a rethink:

The finances aren’t adding up

Make sure your accountant checks, double checks and triple checks every piece of financial information you are given to ensure everything adds up. If it doesn’t, don’t be afraid to ask enough questions to get the answers you need.

The seller isn’t willing to renegotiate

The seller isn’t willing to compromise on the price and other terms despite due diligence having uncovered some serious, hitherto undeclared problems.

Something just doesn’t feel right

Sometimes our gut instinct tells us something isn’t right. If something feels off, even if you can’t pinpoint it, you’re not obliged to close the deal – however much that might infuriate the vendor.

If things proceed smoothly, your solicitor or broker can help you finalise and sign the sale agreement – at which point you become the legal owner of the business!

This article is part of a step-by-step series about how to buy a business.

The first step is: What Industry Should I Buy a Business In?



Faye Ferris

About the author

APAC Sales & Marketing Director for BusinessesForSale.com, the world’s most popular website for buying and selling businesses globally and attracting over 1.5 Million visitors each month. To contact Faye please email [email protected]

@YouAreYourBoss

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