By: Brad Johnson, Managing Director

For entrepreneurs selling their business or pursuing a capital partner, a signed LOI (“letter of intent”) can feel like winning a game. While executing an LOI and moving into exclusivity with a buyer is a great accomplishment, there are still important negotiations and work that goes into the due diligence and closing phase.

After the upfront data sharing, conversations, negotiation, and deal fatigue, it’s tempting to coast, however, the due diligence and closing phase is more like the final quarter of a game. This final sprint requires meaningful effort, and without the right M&A advisor, sellers can make mistakes that cost real money, reputation, and even the deal itself.

Several pitfalls for sellers to avoid in the closing phase include:

Dropping the Ball Operationally

A surprise dip in revenue, slowdown in pipeline conversion, or spike in churn will raise immediate questions from a potential buyer or investor. While you may be able to explain these away, there is risk for a re-trade in the deal terms, a delayed closing timeline to ensure improvement, or a buyer walking away from the deal. Leverage an M&A advisor to lighten the diligence load and project manage third party diligence teams so you and your team can focus on running the business.

Failing to Align Internal Stakeholders

Employees, co-founders, or minority investors can become blockers if their expectations or incentives haven’t been managed appropriately. You should work with your M&A advisor and broader deal team to develop the right message for each of these constituents and consider the right time to bring these folks “under the tent.” Without ensuring alignment from internal stakeholders at the right time, you can unintentionally create hurdles to closing the deal (or at minimum, ill will and fractured relationships).

Supplying Incomplete or Unreliable Information

Buyers will complete a variety of unique diligence workstreams, many of which are led by third-party teams, and these groups rely on organized, accurate data. If information is missing or inaccurate, particularly in key areas, it can raise red flags, slow down the closing process, or even cause a buyer to walk away. Reliable data and thorough responses not only builds buyer trust but also reduces the risk of post-close disputes or liabilities. Experienced M&A advisors help sellers understand the level of detail needed to close the deal, organize your company’s information, and efficiently project manage this phase of the process.

Underestimating the Complexity of Legal Documentation

Closing documentation and agreements require meticulous legal drafting, negotiation, and coordination. Without experienced legal counsel, critical details can be overlooked, key protections may be missed, and the entire process can become disorganized or stall. Experienced M&A counsel not only ensures that shareholder input is properly incorporated but can also drive the certainty and speed at which the deal closes. Without this expertise, deals are far more vulnerable to delays, disputes, or even failure.

Neglecting Post-Close Planning

Unrepresented sellers focus intensely on completing the deal—responding to diligence requests, negotiating terms, and meeting closing deadlines—and can overlook critical post-close planning. It is important to take the time to fully understand and align the post-close integration process with you and your team’s goals. This includes discussing how the first few months will unfold, the roles and responsibilities of all parties, and how the transition can be effectively communicated to internal teams. These challenges are avoidable when founders engage in thoughtful planning, collaborate closely with their future partner, and seek guidance from experienced M&A advisors early in the process.

Selling your software business is more than just a financial transaction—it’s the realization of years of innovation, execution, and hard work. At Founders Advisors, we specialize in guiding sellers through a customized M&A process that aligns with their goals and ensures the best possible outcome for shareholders, the team, and business. If you’re considering a sale or recapitalization of your SaaS business, contact a member of our Technology team to learn how Founders Advisors can help you achieve your goals.