SEARCH  Right Arrow

Seller Mistakes Near The Close Of Escrow Can Tank A Deal

What are some mistakes sellers commonly make as they near the close of escrow?

Let's be honest, typically it takes a while (6 months to a year) to sell a business, from listing to close of escrow, and so it's common that many sellers are anxious as the close of escrow nears with a buyer. Many of my clients who own restaurants and are selling them, have been working tirelessly at their business and are waiting the day that they can hand the keys over to a new buyer.

A deal is not over until it's over, and the escrow has officially closed, and so here is my advice to alleviate any last many hiccups.

1. A seller should never allow a buyer to do their training before the close of escrow. Most contracts stipulate that seller will train buyer for 80 hours or two weeks after the close of escrow. Many buyers are anxious to learn the business, and many sellers would love to hand the keys over and begin a new venture, but until the close of escrow, this is a mistake. A buyer may feel overwhelmed, or the business may have a slow week, and they begin to suspect that the seller lied about the financials or the buyer and seller may have a clash of personalities and throw the deal into jeopardy.

2. A seller sometimes will see a closing date and stop ordering inventory. I have sold sandwich shops, for example, and have seen sellers begin rationing their ordering of meats, bread, cheeses, etc., and when I notify them that the close of escrow will be 10 days later than expected, they are alarmed because they have been cutting back on their ordering. The seller will be paid by the buyer for inventory, so they should not stop their usual ordering practices, and damage the goodwill of the business. Keeping normal business hours, not closing early, cutting down on staff, etc., is also important, because a seller should not give a buyer any valid excuse that they may want to back out of the deal.

3. Keep communication between buyer and seller through the business broker. As the deal ends, the buyer and seller may communicate more frequently, and the broker who they relied on earlier in the transaction, may seem to become less relevant, as the deal seems to be on autopilot. Any disagreements and final negotiations should always have the broker involved, because they will be able to mend conflicting personalities and find common ground if disputes should arise.

4. Unless stipulated otherwise, what the buyer saw in the business when they wrote the offer, stays in the business. I have seen deals thrown into jeopardy because a seller decided that they were taking off the wall a 60-inch TV or replaced it will a cheaper brand and the buyer flipped out. Some sellers may write in the counteroffer of business disclosure that a certain painting, etc., is going with them, because it's a family memento or something, but other than that, they should keep everything in place for the buyer, because even the most trivial things can upset a buyer and destroy deals.

Contributor:

Joe Ranieri, Business Broker: Orange, LA County Areas
Name: Joe Ranieri
Company: RE/MAX Commercial
Area(s) Served: Orange, Los Angeles County Areas
Having owned retail/restaurant businesses for over 20 years, my interest turned to selling businesses rather than owning them. I specialize in LA & Orange County restaurants, fast food independents and chains, bars, & liquor stores. Call 714-292-5448 Cell/Text.
Details  | 
 

Back To Articles & Blogs


Helpful Resources To Assist In Selling And Buying California Businesses
William F. Ziprick, Attorney: Legal Services For Buyers And Sellers

Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of closings. Office: 909-255-8353, Cell: 509-951-7230.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Shalonda Chappel: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

Larry Larsen: Laundry Consulting, Brokerage, Insurance

I have over forty years of experience in the sales, ownership, management, and construction of coin laundries. He is a licensed broker active in the sale of coin laundries, a licensed insurance agent specializing in coin laundry insurance. Phone me at 714-630-9274 or 714-630-Wash.

Peter Siegel, MBA: Business Purchase Financing Solutions

Niche business purchase financing advisory and loan placement services with SBA and Non-SBA Financing, Retirement Fund Rollover Solutions, Combo Financing Packages. To get professionally pre-qualified or more information on the ProBuy/ProSell Programs: 925-785-3118.

Steve Zimmerman: Restaurant Broker Specialist, California

Steve founded Restaurant Realty in 1996. He has personally sold/leased over 1000 restaurants, bars & clubs, & completed over 3000 valuations. The author of "Restaurant Dealmaker- An Insider's Trade Secrets For Buying a Restaurant, Bar or Club" available on Amazon. Reach Steve direct at 415-945-9701.

Janet Carrera: Escrow & Bulk Sale Service - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.


Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Business Purchase Financing Help - Expert Tips For Faster SBA Loan Approvals

Business purchase financing advisor Peter Siegel, MBA shares his views on SBA loan financing. He explains the nuances of the SBA loan process when considering business purchase financing or getting pre-qualified. Reach Peter Siegel, MBA direct at 925-785-3118 regarding SBA & Non SBA Loan Financing.

Getting An SBA Loan To Buy A Small Business: Dispelling Some Major Myths

When seeking SBA loan financing many potential business buyers have wrong information about the process of securing the best financing to buy a business. Peter Siegel, MBA (at 925-785-3118) a business purchase financing expert delves into the myths and facts regarding SBA loan financing.

BizBen Podcast & Webinar: Business Purchase Financing And SBA Loan Options

Ever wonder what is involved in obtaining business purchase financing to buy a business or franchise? Peter Siegel, MBA who has over 25 years advising on all types of financing for business buyers in this BizBen Podcast & Webinar - SBA loans, Non-SBA Financing, Alternative Financing Sources.

Dirty Tricks By Some Business Brokers: Sellers Of Small Businesses- Be Aware

Lee Petsas (Southern California Business Broker) shares his concerns regarding some questionable business practices by some California Business Brokers lately. Other Business Brokers and Advisors weigh in as well on this BizBen Blog post with other "dirty tricks" they have observed and heard about.

Broker Explains Allocation Of The Purchase Price When Selling A Business

There are a handful of key asset categories in allocating or breaking down the purchase price allocation of a California business sale. Allocation is required to complete the transaction. In this blog post Lee Petsas (Orange County Business Broker) at 714-363-0440 covers asset allocation classes.

Attorney Specialist Shares Escrow Instruction Tips When Buying A Business

Once you have successfully negotiated the Asset Purchase Agreement ("APA") for your acquisition it's natural to relax a little and let your guard down. Attorney Specialist Mark Chatow discusses what business buyers should look out for when opening escrow and getting escrow instruction in place.

Deposits With Business Purchase Agreements: How Much? Structure? Refundable?

Purchase agreements when buying or selling a small business can be tricky. A top Southern CA Business Broker discusses this topic including multiple strategies regarding deposits with business purchase agreements. Lee Petsas (Orange County Business Broker) at 714-363-044 contributes this blog post

Business Purchase Financing Expert Peter Siegel - Tips On Proving Cash Flow

What are the actual "provable" adjusted net earnings (cash flow) of a small to mid-sized business being purchased? Buyers need to look carefully at all financial info for the "real" adjusted net income/cash flow. Peter Siegel, MBA (BizBen ProBuy & ProSell Lead Facilitator) at 925-785-3118 explains.

SEARCH  Right Arrow


     

For Sale Postings · Wanted Postings · Blog · Events
Brokers · Resources · Advertising Info · Login
888-212-4747 · Full Version
Terms Of Use · Advertising Policy · Privacy Policy ·