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By Ryan Kuhn. A Harvard MBA, Ryan founded M&A advisor Kuhn Capital 35 years ago. Since then, the firm’s principals have initiated hundreds of high-IP mid-market M&A transactions together worth more than $3 billion. This article was first published 6/13/23 under the title How Buyers Kill M&A Deals and revised 3/8/24.

Many many promising acquisitions never close, most of those lost opportunities the fault of potential buyers. Avoid the seven most common mistakes they make during the sale process:

  • Arrogance and cultural rigidity
  • An undisciplined M&A process
  • And/or slow-walking the M&A process
  • Over-complicated, inattentive due diligence demands
  • Toxic re-trading
  • Violating NDA terms
  • Ignoring the seller’s life post-close

Are you a seller rather than a buyer? You’ll still find this article valuable as a way to anticipate and maybe gently correct counter-productive buyer behavior.

#7) When Big Is Bad

A dysfunctional family of deal killers is loosed upon the land when the buyer’s business differs a lot from the seller’s. Most often the culprit is the buyer’s much bigger size.Big Bully

Other differences — like in industry, location, company culture, etc. — can also cause confusion and friction but because these sorts of differences are more obvious, the parties try harder to overcome them.

Why Does Size Matter?

Many potential buyers much bigger than the target company have been insulated for years from much contact with other companies and ways of doing business. This is particularly true of buyers with limited M&A transactions experience. With their market dominance and even arrogance, they forget that outsiders aren’t familiar with the oddities of their oft-political inner world.

Buyers with this attitude feed seller ignorance and suspicion. When they don’t understand the rationales behind a buyer’s negotiation positions, M&A process, or even terminology, sellers start running out of that absolutely necessary deal lubricant — trust

For instance, I was in the room once when a member of the buyer’s deal team announced to target company owners, “That’s how we do things here.” Predictably, the owners later in effect said, thanks for the memories.

And the Cure Is…

No matter what the dissimilarities between buyer and seller, acquirers do better when they:

  • Approach target companies with patience, an open hand, and a willingness to consider alternatives on how to proceed. Call it a touch of humility. Recall that most sellers don’t have to sell.Getting Along
  • Avoid specialized terms and arcane procedures unique to the buyer’s environment. If your del team must use them, explain them.
  • Don’t forget to explain why an M&A transaction could be win-win for both parties.
  • Propel the conversation forward with a relaxing dinner or two among key management team decision-makers. Chose low-key ones to instill confidence that the road ahead lies straight and smooth. For added relevant experience, include an investment banker or professional M&A advisor to the mix.

#6) My Kingdom for Clarity

From the outset, buyers owe sellers a clear explanation of who makes the final decisions over purchase terms and post-close integration issues. That, plus details on the M&A process and a calendar by which such decisions are made.M&A process clarity

The buyer should also continually update the seller and reconfirm how committed its decision-makers are to going forward. We had a case where the boss of a giant overseas tech services company — a hands-on and therefore chronically unavailable executive chairman – wasn’t even aware that buyside M&A negotiations had been proceeding under LOI with the seller for months. When the purchase agreement finally reached his desk for signature, he abruptly shut the deal down.

Another problem with unclear decision processes and commitment is that sellers get worried they may be walking into a “used car lot” scenario where they negotiate in good faith to reach a hard-fought compromise only to find that the terms are now subject to a second or even third review and modification by some Wizard of Oz behind a curtain.

Confronted with this, sellers lose the desire to compromise simply as a matter of self-defense.

Smart buyers avoid these situations by having their M&A team:

  • Get confirmation through the chain of command to proceed before they do so;
  • Continually report on progress and seek feedback;
  • Independently negotiate deal terms within certain limits internally established in advance;
  • Present best offer terms to the board for an up-or-down vote.

#5) Use All Good Speed

The buyer’s executed letter of intent (LOI) fires the starting gun on the M&A process. It defines when the parties expect to close; how much the buyer will pay and in what form(s); plans for the seller’s employees post-close; etc.speedy M&A process

In signing the LOI, sellers typically have much more to lose from a deal gone off the rails than do buyers.

That’s because while under LOI they must carry a much heavier due diligence load than the buyer; guard against leaks to employees, clients and competitors; assure key employees that their futures are secure; and abide by a “standstill” agreement where they can’t talk to other buyers for the life of the LOI. So, they risk losing those other prospective buyers for good.

Considering this sort of stress, sellers deserve buyers who promptly execute according to the LOI’s terms. A languid pace, cavalier attitude and opaque decision-making during this uncomfortable period make for fraught negotiations over terms.

#4) Wrap Due Diligence in a Bow

As they move past the letter of intent, here’s two ways we’ve seen potential buyers go very wrong in managing the due diligence process.

Data Requests That Never Die

The buyer’s attorney — who is ignorant of the dialog to date and of the business issues that are unique to the target — produces a list of boilerplate questions most of which have already been answered or are irrelevant.

After the target company responds to that list, the buyer’s HR department produces another list that could have easily been integrated into the first one. Many of the questions on this second list are again irrelevant or duplicates of first list’s questions. too many dd questions

Some time later, the buyer launches a third flight of questions, this one led by the junior employees of a large outside consulting firm with no knowledge of the industry, the M&A process, or of the data produced beforehand.

All this actually happened to a sellside client of ours who — after receiving the third list and spending painful hours bringing the junior outside consultants up to speed — terminated discussions.

Word to the wise: Successful buyers understand that the best way to go about obtaining the due diligence information they need is to do so sparingly and only under the careful management of a single and senior deal team member. Peppering the seller with scattered demands from uncoordinated departments within the buyer or worse, a changing roster of inexperienced outside consultants, kills deals. (It also increases the risk that the buyer will violate the terms of its NDA with the seller.)

It’s Like Due Diligence Never Happened

A related buyer mistake is the failure to integrate due diligence findings into the terms of the purchase agreement. For example, buyers who thoroughly investigate the seller’s past-due clients may not need to create complicated ways to value and manage aged accounts receivable.

#3) The Toxic Re-Trade

Once the parties settle on purchase agreement language, they should regard it as writ in stone. To use another analogy, reopening settled issues is like tampering with the lock on Pandora’s Box. repercussions of retrading

Not only does re-trading raise seller suspicions about whether negotiations have been proceeding in good faith, it can cause delays, run up legal bills and, worse, rebound in the buyer’s face. We’ve seen buyers re-open a settled issue only to have sellers return to the table with their own set of new, now very aggressive counter-demands.

I’m a Lawyer and I’m Here to Help

On the topic of fiddling around with completed work, beware inexperienced legal counsel, often corporate lawyers who have closed few or no merger and acquisition transactions. They can be tempted to burnish their image in the eyes of their client by pushing for last-minute minor “improvements” that risk the entire deal. (Both seller and buyer’s counsel can make this mistake. You want an attorney who solves problems, not makes them.)

Like any rule, this prohibition against re-opening finished work does not always apply. There are circumstances where both parties could mutually benefit by revisiting language to horse-trade further. But buyers who propose to do this should expect to reward the seller for cooperation lest the road ahead take a hairpin turn.

#2) NDA, What NDA?

Buyers occasionally leak seller’s proprietary data into the marketplace, albeit typically unintentionally, through carelessness. Close buyer attention to NDA terms can prevent some of this but not all. Buyers’ salespeople are particularly porous vessels.

In their enthusiasm or desire to appear important, they brag to clients about the benefits of the pending deal. Or they pass around rumors like the prospective seller is on the block, may exit the market, etc. If the buyer must include them for some reason in the process, be firm in warning them off. Better not to include them at all.Water Cooler Gossip

All NDA leaks can not only kill deals but spark litigation. Amazingly, many buyers who violate NDA terms are surprised by the heated reactions of the injured seller. This casual attitude gets to the heart of the matter. NDAs may look like a boilerplate formality but for sellers, they’re real serious business.

Illegal Contact

Among the worst violations of confidentiality occurs when a buyer unilaterally decides to contact the seller’s clients directly as part of a due diligence exercise. Doing so is never necessary. Instead, the parties agree that the seller will hire an outside market researcher to survey its clients regarding their satisfaction, suggestions for improvement, whatever the buyer wants to know about them.

#1) What Lies Ahead

A final source of seller concern is what life will be like post-close. Well before that date approaches, the buyer owes the seller a series of carefulthe road ahead planning sessions to tackle such subjects as —

  • How they want the deal announced to employees, clients and the public;
  • Budgets; reporting relationships; employee benefits; hiring/firing plans, etc.;
  • Hammering out the “vision thing.”

Seems obvious but some buyers don’t place much importance on that stuff. Maybe because it’s not their company being sold? But buyers have more at stake in ironing out transition details than simply calming jittery seller staff. Ignoring details about what happens post-close is another way to curb the seller’s enthusiasm.

Besides, getting the seller on board also advances the buyer’s interests by boosting seller morale and reducing turnover.


We’ve talked about how to Avoid the 7 Most Common Mistakes M&A Buyers Make. That is, how to avoid snatching M&A defeat from the jaws of victory, as it were. In sum, beware of —

  • Arrogance and rigidity
  • Unclear, vague M&A processes
  • Slow-walking
  • Over-complicated, irrelevant and inattentive due diligence demands
  • Toxic re-trading
  • NDA violations
  • No thought for the post-close morrow

The good news is that avoiding all of these deal closing pitfalls mostly just takes commonsense seasoned with a dash of experience. Most acquirers with the resources to buy a company likely have that commonsense. And many increase their chances of a successful close by retaining the expertise of a professional advisor to guide them to suitable targets and a safe deal landing.

Further Reading

Avoiding these pitfalls matter little for potential buyers whoMore reading — due to overly optimistic or flawed estimates of synergies with the target — pay a far higher purchase price than the target’s worth. How to avoid doing that is a huge subject in itself. But one place to start is with an HBR piece called So Many M&A Deals Fail Because Companies Overlook This Simple Strategy.

Sellers are not, or course, free of sin either. They’ve compiled their own catalog of obstacles to a successful M&A deal. For a description of where they most frequently go wrong, see our Top 5 Ways Business Owners Kill M&A Deals.

© 2024 Kuhn Capital, Inc. All Rights Reserved

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Ryan Kuhn is the founder of Kuhn Capital (bio). This article is not the product of AI. AI is a product of this article.