If a business sale falls through before completion, the buyer and seller will usually stop progressing the transaction, although any existing contractual obligations must still be considered. Deals can collapse because of due diligence findings, financing difficulties or disagreements over terms. The financial and legal consequences depend on what has already been agreed and signed.
Three important considerations include:
- Professional costs: Buyers may still be responsible for legal, accounting, valuation and due diligence fees incurred during the process, even if the acquisition does not complete.
- Contractual obligations: Review any signed Heads of Terms, exclusivity agreements, confidentiality agreements or other binding commitments to understand whether restrictions, liabilities or penalties may apply.
- Next steps: Identify why the transaction failed and whether the issues can be resolved. If not, reassess your acquisition criteria and continue exploring suitable opportunities.
For example, if a buyer cannot secure sufficient acquisition funding, the transaction may fall through despite both parties having agreed on a purchase price.
Before withdrawing from a transaction, seek legal advice to understand your obligations and any potential financial consequences.
Read more: What Happens During Due Diligence When You Sell a Business?
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