Time Kills Deals: Why Communication Matters in Due Diligence

I waited four weeks for an answer to a basic request during Due Diligence, but instead of an answer, I got more excuses.

So I backed out of the deal.

It was a deal in an industry I loved based on the population growth in Nashville.

The business needed a lot of work. There was a lack of systems and processes. I knew this but was still willing to take a look as my skill set fills that gap.

Up to this point, I had only seen financials from years prior. I set the expectation that I couldn’t commit to a number until I saw up-to-date information.

The owner assured me everything was ready to go and could be shared quickly.

I was upfront and told them exactly how I would value their business and how I would structure the deal.

The owner was fully on board so we started Due Diligence. I requested financials for the last year and tax forms.

Then I waited.

The first week passed, and I gave them a break. Everyone gets busy.

The second week passed, and I sent an email, then followed up a few days later with a phone call. Nothing.

The third week, I sent another email. Left two more messages. Nothing.

The fourth week, I sent an email saying I’ve decided to move on to other opportunities and wish them the best of luck.

Of course I heard back within an hour saying they’d have the documents to me by the next week.

But I was done having my time wasted and the lack of communication.

It sounds harsh, but this is a massive red flag in a deal.

The truth is "time kills deals". It’s one of the most common reasons deals fail to close.

Short of a family emergency, there aren’t many excuses a buyer will accept as to why there has been no response or activity for weeks.

If you’re a seller, respond promptly to requests. If you don’t have the information, tell the buyer upfront. If it will take some time to get it, tell the buyer why. Above all, communicate.

This goes for buyers too. Many LOIs are non-binding. When you say you’re working on financing or lining up investors, then go silent for weeks at a time, those sellers are out looking for other buyers.

Don’t rush the process, but move quickly and with purpose. If you run into an issue, tell the other side and set an expectation for a resolution.

The longer a deal drags out, the less likely it is to close.