Insights

8 reasons deals die after the LOI, and what stops each one

Deals die after the LOI for a short list of repeatable reasons, and most were findable before the letter was signed. The eight most common are a slipping trailing twelve months, an undisclosed problem found in diligence, add-backs that fail a quality of earnings review, buyer financing that does not close, an undefined working capital peg, a third party consent nobody chased, a confidentiality break, and plain deal fatigue.

Signing the letter of intent feels like the finish line. It is closer to the opposite. The day you sign is the day your negotiating position is strongest, and every week after that it gets a little weaker, because you have agreed to stop talking to anyone else while one buyer takes your business apart.

Exclusivity, also called a no-shop, is the period after you sign the letter of intent during which you agree not to talk to other buyers. In the letters of intent I see, it commonly runs 60 to 90 days, but yours is whatever your document says, so read the date before you assume you know it.

The list below is ordered by how often each cause shows up in that window, most common first. It is not ordered by how much each one costs, because the cheap-looking ones often end the deal and the expensive-looking ones are frequently survivable.

The eight things that kill deals after the letter of intent

1. The trailing twelve months slipped while the business was under contract

The single most common deal breaker after an LOI is a business that stops performing while its owner is busy selling it. The buyer priced your business off a trailing twelve month earnings figure. That figure keeps moving every month you are under contract, and a buyer who signed on one number and is asked to close on a lower one will either reprice or walk. The arithmetic is worse than owners expect. Take an illustration: a buyer signs at 5 times $1.8 million of adjusted earnings, and by closing the figure is $1.6 million. That $200,000 slip is a $1,000,000 price problem, because the multiple applies to the shortfall too. Run the business as if nothing is happening, and put someone else in charge of the diligence workload.

2. Diligence turned up something the seller never disclosed

What kills the deal is usually not the problem itself but the fact that the buyer found it instead of being told. A pending employment claim, a customer that gave notice, an owner-related payment nobody mentioned, a lease that expires in fourteen months. Disclosed early, most of these get priced, escrowed, or worked around. Discovered in week six of diligence, the same fact reads as evidence that there may be more. Buyers do not have a way to test what else you have not said, so they reprice the whole file for uncertainty or they leave. Every bad fact you volunteer before the LOI costs less than the same fact found later.

3. The add-back schedule did not survive the quality of earnings review

Add-backs that cannot be traced to a document do not survive contact with a buyer's accountants, and the earnings number falls with them. This is where a large share of post-LOI repricing originates, because the LOI was signed on the seller's adjusted earnings figure and diligence tests every line of it. Personal expenses coded to a clean owner account tend to hold. The same expenses reconstructed from memory during diligence tend not to. A schedule that a buyer's quality of earnings provider trims by a meaningful percentage does not just lose those dollars, it costs credibility on the lines that were legitimate. Build the schedule with support attached, and consider trimming your own weakest items before someone else does.

4. The buyer's financing did not come together

A buyer who cannot fund cannot close, no matter how good the fit looked at the LOI stage. In SBA-financed deals the credit decision belongs to a lender, not to the buyer sitting across from you, and the lender is underwriting your cash flow, your books tying to your filed returns, and an independent business valuation that sizes the loan. In private equity deals the equity is usually committed but the debt may not be. The question to ask before signing, not after, is what specifically is still conditional, who has to approve it, and what evidence exists that this buyer has closed on those terms before.

5. The working capital peg was never really defined in the LOI

A working capital target left vague in the letter of intent becomes the fight that stalls the deal in week eight. The peg is the amount of working capital you are required to leave in the business at closing, and the buyer trues up any shortfall out of your proceeds. What the peg is set at depends entirely on your documents: which months are in the average, whether cash is included, how inventory is valued, whether disputed receivables count. There is no general answer, which is exactly the point. Ask the buyer in writing what months and what components go into the calculation before you sign, and make sure the LOI says it.

6. A third party got a vote and nobody asked early

Landlords, franchisors, lenders, licensing bodies, and large customers with change of control clauses can each stop your closing, and none of them work on your timeline. Your buyer needs the lease assigned, the franchise transfer approved, the permit reissued, or a key contract consented to. These consents take calendar, and their holders have no obligation to hurry, no NDA with you, and full awareness that your closing date is fixed. That combination puts the counterparty in the strongest position at the exact moment you are in the weakest. Read every material agreement for assignment and change of control language 12 to 24 months out, not after the LOI is signed.

7. Somebody found out, and a key employee or customer moved first

A confidentiality break during exclusivity does damage the deal cannot always absorb, because it changes the thing being sold. A key employee who hears a rumor updates their resume. A large customer who hears one calls your competitor for a quote. The buyer is not being unreasonable when they reprice after that, because the business they diligenced is no longer the business they are buying. Control who knows and when: a small ring-fenced group, nothing before a signed letter of intent, and the operations people brought in before they would otherwise meet a buyer face to face and be caught off guard.

8. The deal ran out of calendar, and the seller ran out of will

Deals that drift without a closing date die of exhaustion rather than of any single problem. Six months into diligence requests, with the business under strain and the buyer asking for the same schedule a third time, sellers start deciding the money is not worth it. Buyers know this. Some of them use it. The defense is not endurance, it is a schedule: a written closing date in the LOI, a diligence request list with owners and due dates, and someone other than you carrying the document workload so the business keeps performing. Fatigue is the one item on this list that is almost entirely process, which means it is the one most within your control.

The 30/60/90 exclusivity rule

Put three checkpoints on the calendar the day you sign the letter of intent, and treat a missed one as information rather than as bad luck.

• Day 30. Every open diligence item has a named owner on the buyer's side and a due date. If the buyer cannot produce that list, the deal does not have a process yet.
• Day 60. The purchase agreement is in redline and the disclosure schedules are being drafted. If nobody has sent a draft agreement by day 60, the closing date in your LOI is decorative.
• Day 90. There is either a signed agreement or a written explanation of what is outstanding, from whom, and by when.

The decision rule attached to those checkpoints matters more than the dates: an extension granted without a new closing date is a renegotiation you have not been told about yet. Extensions are normal and often reasonable. Open-ended ones are not. When a buyer asks for more time, the answer is yes with a new date and a written list of what remains, or the answer is that you are going back to the market.

What to do when a buyer asks for a price reduction

A retrade is a buyer's request to lower the agreed price after the letter of intent is signed, usually justified by something diligence turned up. Some retrades are legitimate. A buyer who found a real problem is entitled to reprice it, and a seller who refuses to move on a genuine finding is not negotiating, they are stalling.

Three questions sort the honest ones from the tactical ones. First, is the reason specific and documented, or is it a general statement about risk? Second, does the size of the reduction match the size of the finding, or is a $60,000 issue being used to justify a $400,000 cut? Third, is this the first time the buyer has moved the number, or the third? A buyer who repeatedly renegotiates before closing will also be a buyer who disputes the working capital true-up and the escrow claim after closing.

The reason competition matters here is not that it raises your price on day one. It is that a seller who still has a second interested buyer can decline a bad retrade, and a seller who ran a one-buyer process cannot. That is why the work happens before the LOI, when the Fort Worth and North Texas buyer pool is still an open field rather than a single name.

The pattern underneath all eight

Seven of these eight causes are findable before you ever sign a letter of intent. The trailing twelve months, the undisclosed problem, the add-back support, the working capital definition, the third party consents, the confidentiality plan, and the process schedule are all pre-LOI work. Only the buyer's own financing sits genuinely outside your control, and even that one is mostly answered by asking harder questions before you grant exclusivity.

That is the argument for doing the readiness work early rather than reacting to a buyer's checklist. Diligence does not create problems. It finds the ones already there, at the moment you have the least room to fix them. If you want the longer view of what breaks sales at every stage, not just after the LOI, start with why business sales fall through, then read what a letter of intent actually commits you to and how to prepare for diligence. If your concern is the earnings number itself, the add-backs buyers accept and the ones they reject and the working capital peg are the two places most repricing starts.

Selling a business in Fort Worth or anywhere in North Texas means competing for the attention of buyers who look at a lot of files. What separates the deals that close from the ones that die after the LOI is rarely the quality of the business. It is whether the seller went into exclusivity with the answers already in hand. More on how a competitive process is built is on the Texas business broker page, and the rest of the library is in Insights.

Last reviewed: August 2026. This is general information, not legal, tax, or accounting advice. Exclusivity periods, working capital mechanics, consent requirements, and escrow terms are set by your own documents and vary by deal, by industry, and by counterparty. Talk to an M&A attorney and your own advisors about your specific situation.