The 5 Most Overlooked Deal-Killers in Due Diligence (and How to Avoid Them)

Learn the top 5 overlooked deal-killers that can derail the sale of your business during due diligence. Avoid common mistakes and maximise your sale price with expert insights from The Brokerage Connection.

You’ve found a buyer, agreed on a price, and think the hard part is over. But when due diligence begins, hidden issues in your business can unravel the entire deal.

Even profitable, well-known businesses fall apart at this stage—not because of major fraud or massive debt, but due to smaller, overlooked issues that buyers see as red flags.

In this blog, we explore the five most overlooked deal-killers during due diligence, and how you can address them early to ensure a smooth and successful sale.

1. Poor or Incomplete Financial Records

Buyers need to trust what they’re buying, and that starts with clear, complete, and verifiable financials.

If your books are messy, missing key data, or inconsistently managed, buyers may:

  • Ask for discounts
  • Request longer due diligence
  • Walk away entirely

Avoid it:

  • Engage a bookkeeper or accountant at least 12 months before selling
  • Ensure your P&L, balance sheet, BAS statements, and payroll are accurate and up to date
  • Separate business and personal expenses

Related reading: Business valuation and what it really means

2. Unclear Ownership of Assets or IP

From vehicles and equipment to websites and trademarks, any asset not clearly owned by the business becomes a liability in the eyes of the buyer.

For example:

  • Software licenses in your personal name
  • A domain or trademark owned by a third party
  • Verbal agreements for long-term contracts

Avoid it:

  • Transfer all key assets into the business name before listing
  • Formalise any informal agreements with contracts
  • Clarify IP ownership and registration (especially for eCommerce or digital-based businesses)

3. Unregistered or Non-Transferrable Agreements

Buyers want to know that the business can continue running post-sale. If your key supplier or customer relationships are not locked in, this raises concerns.

Common red flags include:

  • Month-to-month leases without renewal terms
  • Key contracts that aren’t assignable
  • Reliance on handshake agreements

Avoid it:

  • Review supplier, lease, and client contracts for assignability
  • Negotiate fixed terms where possible
  • Get professional help to draft or update agreements

Explore our service for business brokers in Sydney

4. Owner Dependency

If your business relies too heavily on you, buyers will wonder how it will survive without you.

Questions they’ll ask:

  • Who runs daily operations?
  • Can the team function without the owner?
  • Is knowledge or access centralised with one person?

Avoid it:

  • Create SOPs (Standard Operating Procedures)
  • Delegate decision-making to key team members
  • Train staff and document workflows

5. Legal, Tax or Regulatory Surprises

Undisclosed disputes, tax debt, or outdated regulatory compliance can destroy buyer trust.

What buyers fear:

  • Unpaid superannuation or GST
  • Pending litigation
  • Industry licensing gaps

Avoid it:

  • Do a pre-sale legal and tax health check
  • Work with a solicitor to identify compliance risks
  • Get clearance certificates and updated registrations

Conclusion: Prepare Before You Go to Market

At The Brokerage Connection, we’ve helped countless business owners uncover and fix these hidden deal-breakers—before buyers see them.

If you’re considering selling, we recommend a pre-sale audit to identify red flags early and enhance your business’s appeal.

Want help preparing your business for a successful sale?

👉 Visit our page on business brokers in Australia to learn more

📞 Or contact us for a free consultation

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