Aside from unfavorable market dynamics or insufficient due diligence, investors will back out of a deal if they:
1) sense a lack of trust or discontent between team members. Savvy investors will pick up on the vibes between team members by the way they communicate in person and online.
2) sense dishonesty or intentionally unrealistic and misleading information
3) note unusual money transfers
4) cannot get reasonable explanations for valuations, projections and predictions
5) discover outstanding liabilities or activities that could become liabilities.
You may not yet be in a position to sell or merge your company, but setting the stage now for the opportunity can never start soon enough. Note that most of the points above have to do directly or indirectly with communication between team members and customers. Establish trust early on in your startup with honest and transparent communication, rather than trying to fake it at the final hour. Mindful communication between your team members is an on-going process and one that will pay off when the time to sell or merge your company comes along.
Does your company need a better foundation for communication? Contact me at [email protected]