A consortium bid that survived a partner's family crisis

The situation

Eun-ji had sold a company before. Her first business, a small logistics software tool, had gone to a single strategic buyer four years earlier in a straightforward deal that took about four months from offer to close. Her second company, a Toronto-based platform connecting home care aides and early childhood educators with families needing in-home support, was a different animal from the start, because no single buyer wanted the whole thing, and the marketing process she ran produced three separate parties each interested in only part of what she had built.

Rather than compete against each other and drive Eun-ji's price up through a bidding war none of them wanted to fund, the three parties proposed buying together as a consortium: Hyun-woo, who ran a home care staffing business and wanted the platform's aide network; Elena, whose company placed early childhood educators and wanted the educator side of the marketplace; and a third investor who wanted the underlying technology and planned to license it back to both operating businesses after closing. The three had never worked together before this deal, and each came to the table with a different appetite for risk, a different timeline of their own, and no existing relationship of trust to draw on when things got difficult.

Eun-ji, on our advice, insisted the three buyers sign a consortium agreement among themselves before diligence began, setting out how they would split the diligence costs, how decisions would be made as a group, and what would happen if one of them wanted or needed out partway through. Hyun-woo pushed back at first, calling it an unnecessary complication for a deal that was moving well and a signal of distrust among people who were supposed to be on the same side. Elena agreed it was sensible from the start. The agreement was eventually signed roughly five weeks into the process, once Hyun-woo came around, with a deal value that ended up in the mid single-digit millions once the consortium's combined offer was finalized.

Eleven weeks later, Hyun-woo's mother died suddenly and without warning. He stopped responding to emails, missed two scheduled diligence calls in a row, and the consortium's shared timeline, which had every party's workstreams dependent on the others finishing theirs on schedule, began to fall apart in real time as the accountants and technology reviewers waited on information only Hyun-woo's team could provide. Eun-ji called us the day after the second missed call, worried less about the reason for it than about what a stalled consortium meant for her own closing date, and asked, plainly, what she could actually do if the three buyers could not sort themselves out in time.

Where it went wrong

The consortium agreement had anticipated a version of this problem in the abstract, the way most such agreements do: a clause allowing any party to exit if diligence revealed a dealbreaker in the target company, and a separate clause allowing the group to exit a non-performing partner for failure to fund an agreed cost-sharing call within a set number of days. Neither clause was written with a bereavement in mind, because no one drafting a commercial agreement expects to specify what happens when a partner's parent dies mid-deal. The dealbreaker clause required the exiting party to identify a specific problem with the target company itself, which was not Hyun-woo's situation at all; nothing about Eun-ji's business had changed. The funding-failure clause technically applied on its face, since Hyun-woo had missed a scheduled cost-sharing payment, but using a clause built for an uncooperative or bad-faith partner to remove a grieving one would have been exactly the wrong tool pointed at exactly the wrong problem, whatever it might have meant for Eun-ji's own timeline.

The practical difficulty went well beyond sympathy for Hyun-woo's situation, real as that was. The consortium's offer to Eun-ji had been priced and structured around three buyers splitting both the purchase price and the post-closing operating responsibilities for different parts of the business. Hyun-woo's piece, the home care aide side of the marketplace, was not something Elena or the technology investor had any particular expertise or appetite to absorb themselves. If Hyun-woo dropped out entirely, the remaining two buyers needed to either find a replacement for his role quickly, absorb his piece themselves at a discount to what it was actually worth to them, or renegotiate the entire structure of the deal with Eun-ji, who had her own timeline pressures from other suitors circling and was not obligated to wait indefinitely for a three-party deal to sort itself into something smaller.

There was also a diligence cost problem sitting underneath the emotional one, quietly getting worse each week. The consortium agreement had Hyun-woo responsible for a third of the shared diligence spend on accountants and technology reviewers, and by the time he stopped responding, invoices were coming due that he was neither paying nor acknowledging. Elena and the technology investor had to decide, on short notice, whether to cover his share themselves to keep the process moving at all, with no certainty they would ever be reimbursed or that he would ultimately stay in the deal in any form.

Underneath all of it sat a harder question neither buyer wanted to say out loud: whether asking a grieving partner to make a major, deadline-bound financial decision was fair to him even in circumstances where the agreement technically permitted it.

What we did

1. Told Eun-ji plainly what the consortium agreement did, and did not, protect her from. The dealbreaker and funding-failure clauses were tools for the three buyers to manage each other, not rights she could invoke directly, and her own leverage sat entirely in the purchase agreement she had signed with the consortium as a single buying group, not in the side agreement among its three members.
2. Set a firm, written deadline for the consortium's own counsel to confirm Hyun-woo's status. Rather than let Eun-ji absorb an open-ended stall on trust while the three buyers sorted out their situation privately, we required a documented answer by a fixed date, so any further delay carried a consequence Eun-ji could point to rather than an indefinite wait with no leverage of her own.
3. Declined to draft or negotiate the consortium's internal exit and reimbursement terms. Advising the buyers on how to remove or repay one of their own would have put us in the middle of a dispute among Eun-ji's counterparties that was not hers to resolve, and could have compromised her own position if the terms were later challenged by whichever buyer ended up feeling shortchanged by them.
4. Reviewed the purchase agreement itself, not the consortium agreement, for what Eun-ji could actually enforce. Her closing date, her price protection and her right to walk if the buyers could not perform in time all lived in the document she had signed with the consortium as a whole, and confirming those terms held regardless of what happened inside the buying group was what actually protected her position.
5. Advised Eun-ji on the real choice once Elena and the technology investor confirmed they wanted to proceed without Hyun-woo. She could accept a smaller buying group at a reduced price after five months of diligence already completed, or terminate and remarket the company to new buyers from scratch, and we set out honestly what each path was likely to cost her in time, certainty and legal fees before she chose.
6. Negotiated the revised price and closing timeline directly with the consortium's counsel. Once Eun-ji decided a two-party deal was worth more to her than restarting the sale process, we pushed back on the buyers' first proposed reduction, arguing it should reflect only the narrower operating capacity of a two-party group and not the leverage a departing partner had handed the remaining buyers for free.
7. Confirmed in writing that the purchase agreement's representations still ran fully against Elena and the technology investor as the buyers of record. A smaller buying group is not automatically a lesser one on paper, and we made sure Eun-ji's protections under the deal, including her closing conditions and any indemnities she had negotiated, did not quietly narrow just because the group signing it had gotten smaller partway through the process.
8. Walked Eun-ji through what restarting the sale would likely have cost her before she signed the revised terms. Comparing the reduced price against a realistic estimate of the time, uncertainty and renewed marketing effort a fresh sale process would require let her accept the two-party deal as a considered trade-off, not simply because she was tired of a deal that had already run five months longer than planned.

The outcome

The deal closed roughly ten weeks after Hyun-woo's initial withdrawal from active participation, with Elena and the technology investor as the buyers, at a price modestly below the original three-party offer to reflect the smaller group's reduced operating capacity and the added cost of bringing in an outside staffing partner after closing. Eun-ji accepted the reduction rather than restart the sale process with a new buyer entirely, given how far the deal had already progressed and the real time and uncertainty that a fresh search would have cost her at that stage.

Hyun-woo was reimbursed in full for his share of the diligence costs already spent, an outcome the original agreement did not clearly require but that both remaining buyers agreed to as a matter of fairness once the exit was framed as voluntary and documented rather than a default under the funding clause. He did not return to the deal, and the home care aide side of the marketplace was ultimately run by the outside staffing partner Elena and the technology investor brought in, rather than by any of the three original consortium members who had first identified the opportunity together.

This was not the deal any of the four parties had originally planned around the table five months earlier, and it took considerably longer and produced a smaller final price for Eun-ji than the three-party structure would have delivered. But the consortium agreement, even with its gaps around a circumstance no one had written it to anticipate, gave everyone a framework to fall back on rather than a scramble in the dark, and the exit that actually happened was negotiated on reasonable terms rather than forced through a technical default. Eun-ji, reflecting on it afterward, said simply that it was the outcome that let everyone involved still speak to each other once it was finally over.

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