Signs That a Business Buyer May Not Be Serious

Did you know that around 90% of business buyers never follow through on a potential acquisition? There are several reasons for this, but recognizing the red flags early can save you time and effort.

Here are some warning signs to watch out for:

1. Minimal engagement: If the buyer doesn’t spend enough time in meaningful discussions with the seller or ask the right questions, it’s a concern. A serious buyer typically invests at least two hours in an initial meeting.

2. Reluctance to share financial details: If the buyer is hesitant to provide personal or company financials, it may indicate a lack of commitment or transparency.

3. No lender support: A buyer who refuses to provide a letter of support from a lender may not have the financial backing needed for the deal.

4. Excessive “no-shop” clause: If the Letter of Intent (LOI) includes an unusually long “no-shop” clause, it may be a negotiating tactic. The buyer might be trying to wear down the seller, making it difficult for them to bring the business back to market during the negotiation process. This tactic can pressure the seller into agreeing to terms without exploring other potential buyers.

5. Communication breakdown: If the buyer’s response time starts to slow down—emails and calls go unanswered or take longer to return—it’s a sign they may not be as serious as they once seemed.

Stay alert to these signs to avoid wasting time with uncommitted buyers.