After the Business Sale

Transaction Transition Equilibrium is out of balance. The failure rate of transitions after a business sale, particularly in mergers and acquisitions (M&A), is consistently reported to be between 70% and 90% (Google, 2025). This means the majority of deals fail to achieve their intended financial or strategic objectives. Without prior preparation, a seemingly good transaction could turn into a nightmare for the Seller.

Early in the 80s, Mr. Whipple recognized this while selling businesses. Business Owners that thought they had a good deal oftentimes ended up hiring an attorney to enforce their buy/sell agreement for their monthly payment. This is very costly, oftentimes requiring the original owner to go back into the business and work, picking up broken pieces and putting customers in a confused situation. For family businesses specifically, statistics show that only 30% successfully transition to the second generation, and even fewer to subsequent generations.

Mr. Whipple’s Manager Ralph (1985-7) also recognized this and formed a presidential committee for agents that really worked with both the Seller and Buyer for a smooth transition (without dual agency). Mr. Whipple was voted by the Primary Broker and others to be on this presidential committee with the extra suggestions to the Seller in preparation for the sale and support he gave to the buyer so she or he succeeds after the sale. With his organizational communication background from the University of Utah, he always sought the “best” for each party in the transaction. This on-the-side-teaching helped the transition go beyond a few months and kept the buyer on friendly terms with the seller.

Now after 40 years and many different business scenarios, including a 26 million dollar merger, he has learned what makes a transition from owner to new business owner sustainable in a small business or mid-size companies. Careful, well-thought-out preparations before the sale or merger are critical for a business to succeed after the sale.

Here are a few of his thoughts:

Key Reasons for Transition and Post Business Failure

The high failure rate is often attributed to issues during the pre and post-merger integration phases, rather than flaws in the deal structure. Common reasons include:

Poor Transaction Transition Equilibrium: This occurs when the Seller lacks understanding of the Buyer’s motives and business needs. A failure to proactively align the Seller’s business with these needs often results in the Buyer giving up on the transaction or failing to achieve intended goals post-sale.(This is hard for a Selling Agent to do since dual-agency could be found.)
Cultural Mismatches: Differences in personal cultures, values, and working styles could lead to conflict when the new owner steps in, disengaging employees leading to diminished productivity. Prior alignment with a third listening party is crucial with motives outside of the deal payoff.
Lack of Leadership Planning: Inadequate preparation of the next generation or leadership not having a clear plan for the transition is a major issue, especially in family businesses.
Operational & Systems Issues: The business could be too complex and technical for the Buyer and not the Seller. Failure to seamlessly integrate technology, systems, and operational processes could lead to significant problems.
Communication Breakdowns: Ineffective communication to employees about expectations and objectives creates confusion and a lack of clarity.
Misaligned Incentives: A focus on the deal’s completion rather than its long-term success often results in a failure to deliver expected value.

Above are some repeating areas he has noticed over the 35 years in business. That is why he has formed a Transaction Transition Analysis that starts reviewing the potential transition in the pre-close time-frame going into post-transaction support. Many experts suggest that early and comprehensive planning, professional guidance, and a focus on both financial and human aspects of the transition could significantly improve the chances of success of the buyer after the deal. This is of most importance to the Seller, so, she or he gets the monthly payments for the equity they earned.

The Transaction Transition Equilibrium analysis is not a deal killer but strengthens the closure and post-business operations for a stronger cash flow. Sometimes deals are not “fair” and factors weighed before the close show this is happening so this would be reported to the seller and the buyer. Better now than never. And many times that is what happens and a business is lost after the sale.

What do both parties do after the close, so the business will continue after the deal? If the buyer cannot continue the cash flow of the business for reasons unbeknown to the seller and could be identified before the sale, then the buyer and seller could work on these together before and after the deal so, not only will the deal happen but the business continues and the seller gets his monthly contract payment and the buyer gets a successful business that could be expanded.

Finding the equilibrium of the deal before the closing protects the Seller and Buyer. It is not a deal killer but an awakening that could result in a stronger business, helping both Buyer and Seller in the long run. Obviously, all Owners have strengths and weaknesses when running a business. So, how do they mesh with the new Owner/Buyer? And could these, if aligned before and after the deal, remove an obvious blunder after the close? Mr. Whipple could show you how it happens. Don’t wait and find out the hard way.

What is the Equilibrium?

This is more than balance. And gets down to fairness. Both buyers and sellers are more sophisticated than 20 years ago and demand answers. This preliminary equilibrium analysis not only gives the potential Buyer(s) and Seller(s) answers for solidification of the overall business deal but the assurance of success of the business model, at a certain selling price after the closing. As we know, neither party is particularly excellent in the field of business, however, the Seller usually understands the business better than the potential Buyer. But, they still have their strengths and weaknesses when it comes to a transition. So the report gives back suggestions on areas of differences and what possible more advanced training could be used with the Buyer (or pre-closing suggestions for the Seller) after the purchase of the business, so the business will not falter.

Will the business continue after the deal?

This study must be done with both sides of the deal to establish an equilibrium point. The higher the better equilibrium suggests the higher likelihood of the business lasting longer. We suggest to have an advanced equilibrium study by a third party interviewing both the Seller and Buyer 2 weeks prior to the transaction (quantitative and qualitative data).

We will never say the deal is not good, but, always suggest the equilibrium between the buyer and seller for the transaction. Contact us today for an Equilibrium Deal Report pricing.