A few days before Christmas, a business owner calls me.
He’d just spent nearly a year selling his company with his accounting firm.
LOI signed, due diligence launched, contracts drafted… then the buyer withdrew.
Result: back to square one with a bill of about $50,000 sitting on his desk.
What he told me, I hear too often: “surprises” that emerged during due diligence undermined the buyer’s and the bank’s confidence.
Nothing intentionally hidden, but important elements not addressed at the right time, which end up weighing heavily.
What you really need to understand
Due diligence should validate, not discover.
When significant information emerges late, the buyer reassesses their risk.
They renegotiate, extend timelines… or withdraw.
The antidote is a structured sale process that puts the cards on the table before diligence.
The steps in selling a business in Quebec should organize risk early: preparing the file, building a defensible narrative, and aligning the professional’s compensation with your result, not billable hours.
1) Why does it derail when everyone is “serious”?
In most failures, it’s not bad faith that kills the transaction, it’s the orchestration.
The trap is to kick the can down the road on sensitive points: unfavorable EBITDA variation, client dependency, key departures, latent litigation, contracts to renew, forgotten capex…
These issues inevitably resurface — at the worst moment — when more people (banker, lawyers, accountants) are around the table and pressure is mounting. That is exactly what solid seller-side due diligence is meant to do: document and contextualize before the buyer discovers the issue on their own.
The better reflex: address these elements before the LOI in a clear CIM (Confidential Information Memorandum), with explanations and mitigation measures. Preparing the business before going to market is the framework that makes this possible — without that step, the rest gets improvised under pressure.
Trust is built on the absence of surprises, not the absence of imperfections.
2) Aligning incentives: billable hours vs. success fees
A process can consume hundreds of hours without addressing the core risk if the advisor’s compensation isn’t tied to success.
At RCA, our model is 100% results-focused: our fees are paid at closing, with no engagement fees and no monthly charges. It is the same logic behind a business broker in Quebec mandated by the seller: compensation tied to closing, not to hours.
This structure forces us to defuse difficult issues early, because if you don’t get paid, neither do we.
It’s simple: that pressure forces us to look at problems early, because an ignored issue directly weakens the chances of closing.
3) The defensible narrative: telling the truth… at the right time
Presenting your business “in its best light” is not about dressing up the file.
It means explaining.
A solid narrative exposes strengths, but also documents anomalies (atypical year, compressed margin, manager departure, client concentration) and proposes solutions: transition agreements, earn-outs, price adjustments, succession plans, etc.
You have to be rigorous and deal with the details before they become objections.
The same rigor applies to confidentiality. The entire process must be discreet to preserve your relationships with clients, suppliers, partners, and employees.
The moment when you inform employees about the sale is part of that same discipline.
4) Closing a deal is a series of micro-agreements
You need to understand that a transaction is not a single agreement.
It’s a series of micro-agreements (working capital adjustments, seller note terms, representations and warranties, transition timeline, etc.) that detail the initial agreement.
The role of an experienced business broker is to identify and orchestrate the resolution of unresolved or unclear points: we transform irritants into solutions the buyer can defend and the seller can accept.
This pragmatic approach drives the sales process forward and increases the chances of completing the transaction.
Quantified impact
As a simplified example, a “new” discovery during due diligence can hurt badly:
| Element discovered late | EBITDA effect | Perceived multiple | Illustrative impact on value |
|---|---|---|---|
| Loss of recurring client ($200k) | −$200k | from 4.5x to 4.0x | ≈ −$800k + multiple compression |
| Emergency recruitment (key position) | −$90k | stable | −$360k |
Reading: in addition to the mechanical effect on EBITDA, risk perception compresses the multiple.
Value gets hit first, then the energy of the team trying to keep the transaction alive.
A story that ends well
In the story that opened this article, we took over the mandate after the initial failure.
In less than a year, by addressing sensitive points from the start with concrete measures, the transaction closed.
The difference: a process aligned with results and communication without surprises. That is also the concrete role of a business broker who runs the sale of a Quebec SME — orchestrating, anticipating, and avoiding those pitfalls before they cost a year and $50,000.
The seller paid us from the sale proceeds, once the result was achieved.
The lesson is straightforward: what looks expensive at the start often costs far less than a process that derails.
Key takeaways:
- Due diligence validates, it doesn't discover — address sensitive points before the LOI in a transparent CIM
- Align incentives with a success-based compensation model (not billable hours)
- Build a defensible narrative that exposes strengths AND anomalies with concrete solutions
- Orchestrate micro-agreements with a broker who manages the process through closing
- Avoid late surprises that compress the multiple and undermine buyer confidence
