Stumbling Blocks when Buying a Business

Stumbling Blocks to Buying a Business

by | February 4, 2014

We’ve all heard that the perfect storm is coming together with lots of businesses coming up for sale and many buyers in the marketplace.   If you’re buying a business, it’s important to remember that the purchase transaction is about a lot more than the industry and the price.   We expect that once a buyer finds a business he or she likes, the rest is about negotiating price.  This is far from the truth —  sometimes the most unusual parts of the deal cause it to go awry.  Here are some issues to consider:

The Seller’s Emotional Investment

First, when buying a business, you must recognize that the seller has a lot invested in the business emotionally. The business is his baby – something he has nurtured for years or even decades.   For this reason, the emotional aspects of the transaction must be front and center.   A buyer must understand that requests for information or simply digging deeper into an issue can be seen as a personal affront or lack of trust in the seller.  That being said, the buyer should ask lots of questions.   It’s important to dig into the business’ history and operations so you know what you’re getting into with the business – what opportunities exist and what skeletons might be in the closet.   Setting expectations early about what information will be requested, maintaining open communication, and keeping empathy front and center will help balance the emotional aspects of the transaction.

Consideration of Stakeholders when Buying a Business

The deal also has many other stakeholders that must be considered in the transaction.  Each person who is impacted by the deal such as employees, vendors, and the landlord will have a different emotional response and different incentives regarding the transaction, so the timing and content of communications must be carefully considered and planned in advance.   Information flow must be coordinated between the buyer and the seller.    Word travels quickly and can disrupt an entire process if not managed by the parties.

Separating Emotion from Fact

The buyer sits in a unique position that can seem threatening to the seller and the other stakeholders.  Open and transparent communications and due diligence process with the seller will separate the emotion from the factual and help smooth the path to the closing of the transaction.

Enlist Help

You are not alone – Speak with an attorney to discuss your business transaction efforts, contracts, preparing due diligence, and more. Contact us at 425-250-0205 or

Legal Disclaimer: This article contains general information. Do not view this article as legal advice. Talk with counsel familiar with your unique business needs before taking or refraining from any action.