M&A deals are most often delayed by issues that surface late in due diligence, third-party consents that were not requested early enough, regulatory waiting periods, financing contingencies and disagreements over price adjustments or indemnification terms. Most of these delays are predictable. Buyers and sellers who build a realistic closing checklist at the letter-of-intent stage, and start on long-lead items right away, usually close closer to their target date.
A missed closing date is more than an inconvenience. It can strain the relationship between buyer and seller, unsettle employees and customers, increase legal and advisory fees, and in some cases give one side the right to walk away. Below are the most common causes of delay and what each side can do about them.
1. Due Diligence Findings
Due diligence is the buyer’s review of the target’s legal, financial, tax, employment, intellectual property and operational records. Delays typically occur when diligence turns up something unexpected, such as:
- Undisclosed liabilities, pending or threatened litigation, or tax exposure
- Gaps in intellectual property ownership, such as contractors or founders who never signed invention assignment agreements
- Messy capitalization records, including undocumented equity promises or options granted without proper board approval
- Employee misclassification or wage-and-hour issues, which are a frequent concern for California companies
Each finding has to be priced, fixed before closing, or allocated through special indemnities or escrows, and each of those paths takes time. Sellers can reduce surprises by organizing a data room and cleaning up obvious problems before going to market. Our overview of capitalization tables is a good place to start.
2. Third-Party Consents and Notices
Many commercial contracts, leases and licenses contain anti-assignment or change-of-control provisions. In an asset purchase, contracts generally must be assigned, and in a stock purchase or merger, change-of-control clauses may still be triggered. If a key customer contract, office lease or software license requires consent, the buyer may make that consent a closing condition.
Counterparties have no deadline to respond and little incentive to hurry. Identifying required consents early, and agreeing on which ones are true closing conditions versus covenants to use reasonable efforts, can prevent weeks of waiting at the end.
3. Regulatory Approvals
Some transactions cannot close until a government review is complete:
- Antitrust (HSR Act): Deals above the Hart-Scott-Rodino size thresholds require a filing with the FTC and DOJ and a waiting period before closing. The thresholds are adjusted annually, and the premerger notification form was substantially expanded in 2025, which generally means more preparation time.
- Foreign investment (CFIUS): Certain investments by foreign persons in U.S. businesses involving critical technologies, critical infrastructure or sensitive personal data may require a mandatory filing or benefit from a voluntary one.
- Industry licenses: Businesses in regulated sectors, such as healthcare, financial services, alcohol or cannabis, may need regulator approval or new licenses before ownership changes.
4. Financing Contingencies
If the buyer is funding the purchase with debt or a new equity raise, lender or investor requirements can slow the process. Lenders often require their own diligence, third-party reports and closing deliverables. Changes in interest rates or market conditions between signing and closing can also make financing harder to obtain. Sellers usually prefer agreements without a financing condition, while buyers may seek one; how that point is negotiated affects both certainty and timing.
5. Disputes Over Price and Risk Allocation
Even after a letter of intent is signed, the parties may disagree on how the purchase price will actually be calculated and protected. Common sticking points include working capital targets, earnouts, escrow and holdback amounts, the scope of representations and warranties, caps and baskets on indemnification, and whether to use representations and warranties insurance. Agreeing on these economic terms in more detail at the letter-of-intent stage reduces the chance of renegotiation later.
6. Shareholder Approvals and Equity Issues
A merger or sale of substantially all assets typically requires board approval and shareholder approval under state corporate law, and venture-backed companies often have additional approval rights in their charter or investor agreements. Collecting signatures from many stockholders, handling holders who may assert dissenters’ or appraisal rights, and resolving how options and other equity awards will be treated can all take longer than expected. If executive payments are large enough, the parties may also need to address the golden parachute rules discussed in our post on Section 280G, which can involve a separate stockholder vote for private companies.
7. Employment and Transition Matters
Buyers frequently want key employees to sign offer letters, retention arrangements or non-solicitation agreements before closing. Negotiating those agreements, and dealing with employee concerns about the deal, can become a gating item. Note that California generally does not enforce employee non-compete agreements, but a non-compete given by a selling owner in connection with the sale of the business’s goodwill or ownership interest may be enforceable under Business and Professions Code Section 16601, so the structure of those covenants matters.
8. Market Conditions and Material Adverse Change Claims
If business performance or market conditions change significantly between signing and closing, a party may question whether it is still obligated to close. Purchase agreements usually address this through a material adverse effect definition and a bring-down condition requiring representations to remain accurate at closing. Disputes over whether those conditions are met can delay or derail a deal, which is why careful drafting of these provisions matters.
How to Keep a Closing on Track
- Prepare a detailed closing checklist with owners and deadlines immediately after signing the letter of intent.
- Start long-lead items first: consents, regulatory filings, lender requirements and shareholder outreach.
- Negotiate key economic and risk-allocation terms early rather than leaving them to the definitive agreement.
- Include a realistic outside date and clear termination rights in the purchase agreement.
- Communicate regularly among the parties, counsel and other advisors.
The Takeaway
Delayed closings usually trace back to a handful of predictable causes. Identifying them early, assigning responsibility and building the purchase agreement around realistic timelines can save time, money and goodwill on both sides of the table.
Frequently Asked Questions
How long does it usually take to close an M&A deal?
There is no standard timeline. A small asset sale with clean records and no regulatory filings can close within weeks of signing a letter of intent, while a deal that needs antitrust clearance, many third-party consents or a shareholder vote can take several months. The most useful predictor is how many items on the closing checklist depend on someone outside the buyer and seller.
What is the difference between signing and closing?
Signing is when the parties execute the definitive purchase agreement. Closing is when ownership actually transfers and the purchase price is paid. If both can happen the same day, the deal is a simultaneous sign-and-close; if conditions such as regulatory approvals or consents remain, there is a gap between the two, and the agreement governs what each side may and must do during that period.
Can a buyer walk away if closing is delayed?
It depends on the purchase agreement. Most agreements include an outside date after which either party may terminate if the closing conditions have not been satisfied, as long as the terminating party did not cause the delay. Some agreements also require a termination fee in specified circumstances.
Does a buyer need HSR clearance for every acquisition?
No. A Hart-Scott-Rodino filing is required only when the transaction meets the size thresholds, which are adjusted every year, and no exemption applies. Many startup acquisitions fall below the thresholds, but parties should confirm early because the filing and waiting period can drive the closing date.
How Sutter Law Can Help
Sutter Law advises buyers, sellers and founders on mergers and acquisitions, from the letter of intent through diligence, negotiation and closing. Contact us for a free consultation.
This article is general information, not legal advice. Reading it does not create an attorney-client relationship.
