Two founders sign letters of intent in the same month, each at a price they like, each shaking hands with a buyer they trust. Six months later one has banked the proceeds. The other is back at his desk, running the company he thought he had sold, hundreds of thousands of dirhams poorer in legal fees, wondering whether word has reached his competitors that the deal fell through. Nothing about the second business was worse — only how the stretch after the LOI was managed.
That stretch is the most dangerous part of a sale, and the part founders least expect to be. Signing the LOI feels like the finish line. It is not — it is the start of the phase where deals most often die, and you enter it having just surrendered your greatest source of leverage.
The Danger Zone: Why Exclusivity Changes Everything
Almost every LOI carries an exclusivity period — a no-shop clause barring you from talking to other buyers, commonly sixty to ninety days, often longer. Up to the LOI your power came from competition: others in the room disciplined every move (the through-line of what an M&A advisor actually does). The moment you sign exclusivity, that field goes dark, and you are negotiating with one buyer who knows you have no alternative and has weeks of cover to argue the price down. Every killer below is worse because of this one fact: de-risking the post-LOI phase is, at root, the discipline of not letting exclusivity become helplessness.
Diligence Surprises and the Re-Trade
The most common way a deal dies, or survives at a worse price, is the re-trade: mid-diligence, the buyer says the number has to change. The honest version is fair — if diligence uncovers something material that was invisible at the LOI, the price reasonably moves. The abusive version wears the same clothes: a buyer who simply wants a discount nominates small issues, frames them as risk, and times the demand for when you are deepest into exclusivity. You cannot prevent diligence; you can make sure it holds no surprises:
- Run diligence on yourself first, and build the data room before exclusivity. A proper sell-side due diligence pass — ideally a full vendor diligence exercise against the diligence checklist — finds the problems while they are yours to fix or frame. Every issue you surface is a re-trade lever removed.
- Disclose the warts deliberately. A known issue you raise with context is a footnote; the same issue the buyer discovers is a crisis. There is judgement in how you disclose — see what not to tell a buyer — but concealment reliably backfires.
When the Buyer’s Financing Falls Through
A buyer can want your business sincerely and still be unable to pay for it. Where the consideration depends on acquisition debt or capital not yet locked down, the deal carries a financing risk unrelated to how good your company is, and a sound deal can die on the funding. That risk runs highest with a thinly capitalised acquirer assembling debt after signing — one reason the strategic versus financial buyer distinction matters before you go exclusive. De-risk it beforehand:
- Test the funding at the LOI stage. Among the questions to ask a potential acquirer, how the purchase will be funded — and how far that is committed rather than hoped for — is the most revealing. Vague answers are a warning.
- Weigh certainty of close, not just headline price. A lower offer from a buyer who can fund it tomorrow beats a higher one resting on financing that may never arrive.
Loss of Momentum and Deal Fatigue
Deals are perishable. The longer LOI-to-close drags on, the more likely something — a market wobble, a buyer’s competing priority, a key person leaving — intervenes to kill it. Time is the enemy of the seller, and deal fatigue compounds it: the grind of endless diligence requests wears founders down until they concede points simply to end it, so a patient buyer can win on terms through nothing but attrition. Protecting momentum is its own skill:
- Put a timetable in the LOI — target dates for diligence, the first draft of the sale agreement, and signing. A deal without deadlines drifts, and drift favours the buyer.
- Resource the process so it does not stall on your side. Most fatal delays are self-inflicted — a document not produced, a question unanswered. This is the project-management work an advisor carries, so the M&A process keeps moving while you run the company.
Working-Capital and Completion-Account Disputes
A deal can survive diligence and financing and still come apart on the mechanics that bridge the headline price to the actual cheque. Completion accounts — a post-closing true-up against the balance sheet handed over — are the most fertile territory for dispute in private deals. The fights are over the working-capital peg and over what counts as debt: buyers argue more items are debt-like than the balance sheet shows, and in the UAE the unfunded end-of-service gratuity is routinely treated as debt though no bank is owed a dirham. Every item in that bucket comes off your proceeds.
Decide the mechanism early — the full treatment is in working capital and completion accounts, and the strategic choice sits inside deal structure. Settle the definitions and the peg in the agreement, while you still have leverage. Where your accounts support it, a locked-box — price fixed at signing, no true-up — removes this category of dispute entirely.
The Key-Customer or Key-Person Wobble
A buyer’s confidence rests on the durability of what they are buying, and the post-LOI window is when it gets stress-tested. A major customer hints at leaving, a key employee starts taking recruiter calls, a second-in-command grows uneasy about new ownership — any of these, surfacing mid-diligence, can rattle a buyer into a re-trade or a walk. In the Gulf it has sharper edges: founder-led businesses here are often concentrated — a few relationships carrying a disproportionate share of revenue, frequently held personally by the departing owner — so one wobbling account weighs more, and because employee visas are sponsored by the entity, key staff get a natural moment to reconsider as the deal nears. De-risk this on two horizons:
- Reduce the concentration before you go to market — broaden the customer base, move key relationships onto the team, document what lives in your head. Central to preparing a business for sale, and impossible inside exclusivity.
- Manage the wobble quietly during the process — retention arrangements for the people who matter, and rigorous confidentiality so the deal does not leak and trigger the departures you fear.
The Business Softens Because You Took Your Eye Off It
This is the most self-inflicted killer of all. A sale is enormously distracting, and it pulls your attention off the one thing the buyer is paying for: a business that is still performing. You signed the LOI on a trajectory; if the next two quarters come in below it because you were buried in the deal instead of running the company, the buyer has the most legitimate re-trade argument of all — the business they agreed to buy is not the one in front of them. You handed them the discount yourself. So run the company as though the deal will not close:
- Protect your operating focus — delegate the deal load to an advisor or a trusted finance lead, so the process does not consume the person whose attention the company most needs.
- Keep hitting your numbers to completion. A deal is not done until the money clears. Performance that holds, or climbs, through the process strips the buyer of their best lever and can hand you one of your own.
How Deals Stay Alive to Close
Read the killers back to back and a pattern emerges: the deal that survives is the one where the seller prepared so diligence held no surprises, kept a credible alternative alive, protected momentum, and kept performing to the day the money cleared. The first is the largest lever, and almost all of it must happen before exclusivity — exactly what the exit readiness scorecard is built to surface. None of it is glamorous, which is why so many deals that should close do not, and why the ones that do belong to sellers who treated the signed LOI as a beginning, not an end.
If a sale is on your horizon, work in order: ground your number with the valuation calculator, then see where you stand against a buyer’s scrutiny with the exit readiness scorecard. Our M&A strategy and execution advisory runs this work end to end, from preparation through the danger zone to completion. For a direct read on where your deal is most likely to wobble, book a strategy session and we will pressure-test it against your numbers — before the buyer does.
Frequently asked questions
What percentage of deals fall apart after the LOI is signed?
There is no honest single figure for SME M&A in the GCC — anyone who quotes you a precise percentage is guessing. What practitioners do agree on is that signed letters of intent fail far more often than founders expect, and that the failures cluster after the LOI rather than before it. The useful takeaway is not a number but a posture: treat a signed LOI as the start of the riskiest phase, not the finish line.
Can a buyer really lower the price after we have already agreed an LOI?
Yes. An LOI is almost always non-binding on price, which means the agreed number is a starting position that diligence can move. The legitimate version is a re-trade justified by something genuine that diligence uncovered; the abusive version is a manufactured reason deployed late, once exclusivity has removed your alternatives. The defence against both is the same — a clean, pre-tested data room so diligence surfaces no surprises, and a credible alternative buyer kept alive as long as possible.
How long does the period between LOI and completion usually take?
For a founder-led SME in the Gulf, commonly three to six months, though complex deals run longer. The danger is not the duration itself but what happens during it: momentum decays, the founder gets distracted, and the business numbers can soften — each of which hands the buyer leverage. The single most useful discipline is to keep running the company hard right through to completion, as though the deal might not happen.