Why Transactions Fail To Close – What Is A Seller To Do?

It's difficult to know for certain what percentages of transactions fail to close, because investment bankers don't like to disclose their failure rate. However, it's estimated that as many as one in three deals will fail to close after executing a letter of intent ("LOI"), and that roughly four of every five deals that do successfully close take much longer than expected.

The most prominent factors that result in failed transactions and suggested steps a seller can take to mitigate against such an outcome are summarized below:

1) New issues uncovered during due diligence:

1. Ensure full disclosure of major issues prior to the LOI, be they known or contingent in nature; e.g. a threatened lawsuit