US turnaround king Wilbur Ross, who is among the seven bidders eyeing Tata Steel's UK operations, is set to abandon the deal.
"Wilbur has been reasonably open that this deal is far less attractive if Brexit happens," a source told Sky News.
These concerns are shared by other potential buyers who have expressed doubts over Brexit's impact on global demand for steel and selling steel produced in the UK in the European single market.
Another source told Sky News that the vote to leave the EU will discourage Tata Steel from retaining its UK business despite getting a support package and a possible restructuring of the British Steel Pension Scheme.
On Tuesday, the Community Union hit out at the steel giant for its lack of clarity on the future of 11,000 steel workers.
"Tata made it clear they no longer wanted to keep their UK businesses. The UK government stressed the need for Tata to act as a responsible seller; however it is now unclear whether Tata intends to sell the business at all. Since that first announcement, the trust and good will of Tata’s loyal workforce has been pushed to the limit," it said.
"It is simply unacceptable that our members are expected to learn more about this process from the media than their own employer."