Avoiding Deal Breakers: Make Your Business Sale-Ready
Most deals don’t fall apart in negotiation—they fall apart in due diligence.
In this episode of Freedom to Exit, Lani Dickinson exposes the top deal killers that derail business sales at the last minute—and shares exactly what you can do now to make your business sale-ready, long before buyers ever get involved.
From messy financials to key-person risk to environmental liabilities, these hidden issues cost sellers millions (and sometimes cause deals to fall through entirely). But with the right preparation, you can remove risk, speed up the sale process, and protect the value you’ve built.
What You’ll Learn:
- Why 30–50% of businesses fail to sell during due diligence
- The most common reasons buyers back out at the last second
- Real stories of deals that collapsed (and how they could’ve been avoided)
- How to identify and fix financial, operational, and legal red flags
- Why clean books, proper licensing, and diversified revenue are non-negotiable
If you think your business is ready to sell because it’s profitable—you’re missing the bigger picture.
This episode will help you protect your deal before it’s ever on the table.
Get the Free Changes Assessment: https://stealthfreedomtoexit.com/changes
Want to know where your sales process is broken and how to fix it? Take the Changes Assessment to identify where you're losing leads, how AI and automation can save you time, and how to get out of the daily sales grind.
-----
Enjoyed this episode?
Subscribe to Freedom to Exit for more insights on building a scalable, sellable business that buyers compete for.
Connect with Lani Dickinson:
📌 Instagram: @stealthfreedomtoexit
📌 Facebook: Lani Dickinson
Need expert guidance on your exit?
Visit stealthfreedomtoexit.com or email info@stealthfreedomtoexit.com.
If you got value from this episode, leave a review—it helps more business owners find the show!
Transcript
>> Lani Dickinson: Hey. Exit Focus Founders. Welcome back to the Freedom to Exit
Speaker:podcast where we talk about how to build a business that runs
Speaker:without you, scales predictably and sells for
Speaker:top dollar when you're ready.
Speaker:Today's episode is about the biggest nightmare for any
Speaker:business owner trying to sell. Having the deal
Speaker:fall apart at the last minute. If you think
Speaker:your business is sellable just because it's
Speaker:profitable, that just isn't true.
Speaker:Buyers can find hidden risk you didn't even know
Speaker:existed. Most business sales die and
Speaker:do diligence, but you can prevent this. Let's make
Speaker:your business deal proof before you sell.
Speaker:We'renna break down the top deal killers and show
Speaker:you how to remove these risks. Years before the
Speaker:sale, explain why many business buyers now
Speaker:purchase assets, not the entire company, to avoid
Speaker:taking on unknown risks. And today we're
Speaker:gonna cover the top reasons businesses fail to
Speaker:sell after getting an offer. How to prevent
Speaker:surprises and due diligence like compliance issues,
Speaker:customer concentration issues, other liabilities,
Speaker:environmental risks, and I'll give you some real world
Speaker:examples of deals that collapse and what every
Speaker:seller should do in the next one to three years before
Speaker:exiting. Here's the truth. 30 to
Speaker:50% of businesses that don't sell fail
Speaker:in due diligence, not in negotiations.
Speaker:60% of failed deals are due to financial
Speaker:inconsistencies or surprise liabilities.
Speaker:40% of buyers back out due to operational
Speaker:weaknesses, key person risk or compliance
Speaker:concerns. When they uncover these issues, they walk
Speaker:away. Especially financial inconsistencies.
Speaker:Revenue overstated profit, not exactly right.
Speaker:Expenses not matching. This is what happens when
Speaker:business owners mix in personal expenses
Speaker:and use aggressive accounting tactics.
Speaker:Buyers are going to demand clean books. You may as well do
Speaker:it now. If you have unresolved legal or
Speaker:compliance issues, other disputes, tax
Speaker:liabilities. Get those resolved before you want to talk to
Speaker:buyers. Intellectual property problems,
Speaker:no trademarks, unclear ownership of proprietary
Speaker:process or reliance on software or code
Speaker:the business doesn't actually own. this is a major deal breaker,
Speaker:especially in service and tech based businesses.
Speaker:Key employee risk. Businesses too
Speaker:dependent on the owner or a few key people are at an
Speaker:extreme risk. If a buyer sees that
Speaker:the company may struggle without a certain individual,
Speaker:they're gonna either lower their offer or walk away.
Speaker:If you have supplier or customer concentration risk
Speaker:where 30% or more of your revenue comes from one place,
Speaker:they may walk away. What happens if that person leaves post
Speaker:sale? So diversification is
Speaker:key. Environmental risks like storage tanks,
Speaker:underground drilling, regulatory zoning issues. These can
Speaker:delay a sale and maybe even close the sale.
Speaker:Undisclosed liabilities like debt tasks,
Speaker:operational risks. If you don't disclose those
Speaker:UPFNT in full transparency, it destroys
Speaker:trust. Anything that delays time
Speaker:and trust is likely going to be
Speaker:a red flag and kill the deal. The
Speaker:result? Buyers walk away either entirely
Speaker:or they drastically reduce their offer to hedge against
Speaker:the risk. Here are a couple real world examples of deals
Speaker:that fell through and why Compliance and Licensing
Speaker:Issues so I was involved in a purchase where we
Speaker:chose not to buy the full company. We just bought the
Speaker:assets. The problem was we were aciring a
Speaker:healthcare facility and the business we were
Speaker:acquiring had compliance issues in its past
Speaker:from regulatory violations. Our dilemma?
Speaker:Buy the company and inherit the past
Speaker:regulatory issues, fines and an unknown
Speaker:future implication. Not a good option
Speaker:or only by the assets and apply for new
Speaker:licensing. That's the best option. But we lost six
Speaker:months of reimbursement to avoid the legal
Speaker:liability. That's what we chose to do
Speaker:and we may have avoided financial and legal
Speaker:baggage from past owners in the future, but we also missed out
Speaker:on six months worth of earnings. So we
Speaker:got a new license under a clean slate and that was good. The deal
Speaker:closed successfully with no hidden liabilities. But if they hadn't been
Speaker:upfron that deal might have closed or might have just been
Speaker:canceled. A plumbing company I know about was selling for 5
Speaker:millionars but 60% of its revenue came from one
Speaker:single contractor. The buyer said e. If that
Speaker:one contractor closed or left, this business would
Speaker:lose most of its revenue overnight. So
Speaker:they discovered that during due diligence
Speaker:and cut their offer in half. So that didn't
Speaker:go through because that wasn't viable for the seller. This could
Speaker:have been avoided if the seller had been able to document and
Speaker:clearly articulate a growth plan or
Speaker:diversified their customer base a couple years before
Speaker:selling. Securing long term contracts with major
Speaker:clients to guarantee revenue stability
Speaker:or if they could have proved that the business could survive without that
Speaker:single client. But they didn't do that. Here's another one that I
Speaker:was involved in. The business was built on
Speaker:land that had historical oil drilling activity.
Speaker:The prior owner still owned the oil rights
Speaker:and mineral rights and was still responsible for
Speaker:underground storage tanks. So before the sale could
Speaker:proceed that all had to be
Speaker:surveyed and the old owner had to approve
Speaker:the new buyer to make sure that they felt like they
Speaker:would take responsibility for that future environmental issue.
Speaker:The deal took months longer than expected because
Speaker:of those government inspections and the final
Speaker:sale. Relying on all of these people coming
Speaker:to these additional agreements about the environment.
Speaker:And this was an already complex and stress
Speaker:negotiation. And guess what? An old
Speaker:banknote from the prior owner surfaced in
Speaker:the title search. The buyer, seller or original owner
Speaker:had to pay that off before the deal could close. So here's a
Speaker:key lesson. If your business owns real estate,
Speaker:has an environmental issue, get all of
Speaker:that assessed and listed or taken care of
Speaker:and come transparently to the deal. Make sure your title
Speaker:is clear before you try to start negotiating a
Speaker:sale. Get your financials in order.
Speaker:Secure your intellectual property and contracts
Speaker:Reduce your owner dependencies and key people
Speaker:risk. Address environmental real estate contract
Speaker:issues get the banks paid off Speed up the
Speaker:due diligence process time KE Killelss deals.
Speaker:So take the changes assessment at the link in the show notes
Speaker:to see where you might stand in all of this and let's get you out
Speaker:of your business.
