Why do business sales fall through?

A signed letter of intent is a strong signal, not a guarantee, and plenty of Canadian small business deals that reach that stage never actually close. The reasons tend to repeat across very different businesses.

Financing does not come through

A buyer counting on a bank loan, a federal small business financing program, or a specific lender can lose the deal if approval takes longer than expected or comes back lower than needed. This is one of the most common and most fixable failure points, since it can often be reduced by checking a buyer’s financing plan early rather than after months of negotiation.

Due diligence turns up something unexpected

A customer contract that turns out not to be assignable, financial statements that do not reconcile, or a liability the seller did not disclose can all change how a buyer sees the risk. Sometimes this leads to a lower offer instead of a collapsed deal, but a big enough surprise, or one that suggests the seller was not straight with them, ends the negotiation outright.

The price and terms drift apart

A gap between what the seller expects and what the buyer is actually willing to pay can survive an LOI on the assumption it will close during negotiation, and then fail to close after all. Disagreement over an earn-out, a vendor take-back, or how much of the price is contingent on future performance often turns out to be a valuation gap wearing different words.

Confidentiality breaks down

News of a sale reaching staff, competitors or key customers before the deal is close to certain can unsettle exactly the relationships a buyer is paying for, sometimes enough that the buyer walks away rather than take on a business that looks less stable than it did a month earlier.

One side loses momentum

A process that drags on through repeated rounds of requests and delay produces real deal fatigue, and a seller having second thoughts, or a buyer getting distracted by another opportunity, ends more deals than either side likes to admit. Keeping the process moving with clear deadlines is one of the more underrated ways to protect a deal.