Supplier Almost Kills a deal!

During the recent sale of a high-volume fast-casual restaurant in Orange County, we opened escrow, and as you may know, opening escrow makes the deal public. However, don’t panic—it’s not like the information is plastered on a billboard. It’s typically published in a small local newspaper (yes, those still exist, believe it or not) in the city where the business is located.

Many suppliers track these escrow openings and, as a standard practice, start trying to collect current invoices and past debts from the business. One day not long after we opened Escrow, a supplier walked into the restaurant and asked to speak to the new buyer. This did not go over well, as the person he asked was the manager. The manager immediately approached her boss (my seller) and asked, “What’s going on?” My seller called me in a panic, worried that the employees might quit.

In this case, as in most, the employees didn’t quit. In fact, they sometimes worked even harder knowing that change was on the horizon. There’s no trick to avoiding this situation other than being prepared with a story to explain to anyone who asks. With good communication between your broker, buyer, and seller, these and other potential deal killers can be avoided or minimized.