When Deals Fail Despite the Right Price
The buyer is found and the price is set, until the financing collapses. What owners must verify before they commit.
There are moments in a sales process that bring more disappointment than any other. The buyer is enthusiastic, the price is right, the due diligence has been positive. And then, right before signing, the news arrives. The financing is not secure.
The deal collapses. Not because the company wasn’t good enough, but because the buyer cannot deliver on their promise.
Many owners underestimate how heavily the success of a sale depends on the buyer’s financial backing. They focus intensely on the price, the contracts, and the personal chemistry. But they forget the one question that determines everything. Where is the money coming from, and how secure is it?
The Illusion of Solvency
In my experience, there is nothing more frustrating than watching a well-negotiated deal fall apart because the buyer fails to deliver the financing. And it happens far more often than you might think.
Some buyers genuinely overestimate their capabilities. They assume their bank will simply follow along, counting on commitments that never actually materialize. They promise what they ultimately cannot deliver.
Others are deliberately optimistic. They hope the financing will somehow work itself out along the way, unconsciously putting the seller under immense pressure.
In both cases, the result is identical. The seller loses valuable time, trust, and often other qualified prospects whom they turned down during the exclusivity period. I have seen owners who needed months to regain a strong negotiating position after a broken deal. Not because their company was worth any less, but because the market sensed that something had gone wrong.
What Truly Matters
The question is never only “Can the buyer pay?” It is “How secure is their financing?”
A reputable buyer will be able to show you early on exactly where the funds are coming from. Equity, binding financing commitments, transparent structures. The more transparent, the better.
Caution is highly warranted when everything remains vague, when the buyer evades the topic, points to “next steps,” or hides behind overly complex structures. In many cases, this isn’t bad intent, but sheer uncertainty. But you shouldn’t have to pay the price for it.
Furthermore, not all financing is equally stable. A buyer relying heavily on leverage takes on significantly higher risks. If the bank modifies its terms later or pulls out entirely, you are right back at square one. A buyer backed by a strong equity cushion is often the more reliable partner, even if their headline price is slightly lower.
The Art of Asking the Right Questions
In many conversations with sellers, I notice that those who suffered late disappointments simply asked the wrong questions. They asked “What will you pay?” instead of “Where is the money coming from?”
Gaining clarity on financing early protects you from bitter surprises. It takes four things.
Understanding the buyer’s financing structure inside out.
Insisting on binding, written commitments rather than verbal assurances.
Refusing to settle for vague letters of intent when it comes to capital.
Maintaining a viable Plan B in reserve just in case.
This is not a matter of distrust; it is a matter of diligence. Especially for a deal involving a lifetime’s work, optimism alone is misplaced.
What Remains
A good deal is not the one with the highest price. It is the one that actually crosses the finish line.
When selling your company, you should not just rely on the buyer, but on their financial backing. The earlier this question is settled, the more secure your path to signing. And if a buyer cannot or will not answer this question, that might just be your answer right there.
A question for you:
Do you know how your buyer intends to finance the acquisition, or are you just hoping for the best?
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Great companies deserve a future. And every future begins with a clear decision. If you are currently reviewing your strategic options, give me a call. A brief, 20-minute call is a discreet, direct way to map out potential next steps.
Dr. Felix Tschopp
+41 79 303 33 31 | ft@tschoppgroup.com | tschoppgroup.com | LinkedIn