Avoid the 7 Deadliest Mistakes M&A Buyers Make

Since Ryan founded M&A advisor Kuhn Capital, the firm’s principals have initiated 80 mid-market M&A tech transactions worth more than $3 billion.

Many promising acquisitions never close, largely due to buyer errors. Avoid the seven deadly mistakes M&A buyers make that kill deals dead:

• 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 for ideas about how 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 simply the buyer’s much bigger size.

Other differences (e.g., industry, location, growth stage, 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?

Buyer size is a leading predictor of the nature of its culture. I’ll define culture as “the way we do business around here.” The bigger the buyer, the more likely it is to have been insulated for years from much contact with other companies and ways of doing business, even from its customers.

This is particularly true of buyers with limited M&A transaction experience. With their market dominance and sometimes even arrogance, they forget that outsiders aren’t familiar with the practices and even specialized argot of their often politics-driven inner world.

The problem with this attitude is that it feeds sellers’ ignorance and suspicions. When sellers don’t understand the rationales behind a buyer’s negotiation positions, M&A process, or even terminology, they start running out of that necessary deal lubricant — trust

For instance, during a discussion about software development, I once heard a member of the buyer’s deal team bluntly tell the target company’s owners, “That’s not how we do things here.” Predictably, the owners later said, in effect, “Thanks for the memories.”

And the Cure Is…

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

• Approach target companies with patience, an open hand, and a willingness to consider alternative approaches to proceeding. Call it a touch of humility. Recall that most sellers don’t have to sell.
• Avoid specialized terms and arcane procedures unique to the buyer’s environment. If your deal team must refer to them, take time to describe what they mean.
• To increase M&A success, don’t forget to be clear about why an M&A transaction is a win-win for both parties. There’s nothing more off-putting to sellers than getting the sense that the buyer’s doing them a favor.
• Given a shared desire to proceed with more explicit M&A discussions (typically after a seller presentation), move things forward with a relaxing dinner, even two spaced apart, for key members of the management team. The point is to build mutual trust that the road ahead lies straight and smooth. To add relevant experience and role as a sort of moderator, invite your M&A advisor into the mix (but not M&A counsel!).

#6) My Kingdom for Clarity

From the outset, buyers owe sellers a clear explanation of who will decide how the M&A process proceeds, the purchase terms, and post-close integration issues.

The buyer should also continually update the seller and reconfirm its decision-makers’ commitment to moving forward. We once had a case where the boss of a large Indian tech services company—a hands-on, and therefore chronically unavailable, executive chairman—wasn’t even aware that buy-side M&A negotiations had been underway with our sell-side client for months under an LOI.

He finally learned of it as we were preparing to close, then abruptly terminated discussions without explanation.

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 (aka, a “re-trade”) by some Wizard of Oz behind the curtain.

Confronted with this, sellers lose the desire to compromise simply out of self-defense. Smart buyers avoid these situations by having their M&A team:

• Get confirmation from relevant decision-makers in the chain of command for each deal step (LOI terms, employment agreements, how to define sufficient net working capital, etc.) before proceeding with the seller.
• Operate within a pre-authorized valuation range within which the M&A team may negotiate independently.
• Seek re-confirmation of final terms from key decision-makers.

#5) Use All Good Speed

The buyer’s executed letter of intent (LOI) signals the start of 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. (For more about LOIs, see my article The Perfect Letter of Intent).

When signing the LOI, sellers typically have much more to lose if a deal falls apart than buyers do.

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. They therefore risk losing those other prospective buyers for good.

Given this level of stress, sellers deserve buyers who execute promptly in accordance with 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 LOI terms and into a close examination of the seller’s business, there are two ways we’ve seen potential buyers go off course in managing the process.

Data Requests That Never Die

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

After the target company responds to that tedious list, the buyer’s HR department produces another canned list containing many of the same questions, including new ones that are still irrelevant.

Some time later, the buyer launches a third round of questions, this one led by junior employees of a large external consulting firm with no industry, M&A, accounting, or KPI expertise.

All this happened to a sell-side client of ours who, after receiving the third list and spending painful hours bringing the junior outside consultants up to speed,  finally terminated discussions with prejudice.

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, senior and highly organized deal team member.

Peppering the seller with scattered demands across uncoordinated buyer departments, or worse, a changing roster of inexperienced outside consultants, kills deals. They also increase the risk that the buyer will breach its NDA with the seller.

It’s Like Due Diligence Never Happened

A related buyer mistake is failing to leverage due diligence findings in the purchase agreement. For example, buyers who thoroughly investigate the seller’s past-due clients may not need to implement complex, cumbersome procedures to value and manage those aging accounts receivable. Rather, simply leave them with the seller and deduct their face value from cash due at closing. (For a discussion of what’s in the perfect Purchase Agreement, see my article on the subject.)

#3) The Toxic Re-Trade

Once the parties settle on PA 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.

Not only does re-trading raise seller suspicions about whether negotiations have been proceeding in good faith, but it can also cause delays, run up legal bills, and, worse, rebound in the buyer’s face.

We’ve seen buyers reopen 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

As for fussing with completed work, beware the inexperienced legal counsel, often a corporate lawyer who has closed only a few or no mergers and acquisitions transactions. They may be tempted to burnish their image in their client’s eyes 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 isn’t ironclad. There are circumstances in which both parties might mutually benefit from revisiting the terms. But buyers who 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 sellers’ proprietary data into the marketplace, albeit usually through carelessness. In other cases, when confidentiality violations are deliberate, the usual suspects are salespeople. In their enthusiasm, desire to appear important, or even to handicap a competitor, they leak to clients the benefits of a pending acquisition.

Or if their employer looked at a competing company for sale but passed, then a salesperson may tell his clients that the company is in trouble and on the block.

So if you, as a buyer, must include salespeople on your M&A team, be firm about the legal and career risks of loose lips. NDA leaks can not only spark litigation, they can also kill deals.

Notably, many buyers who violate NDA terms are surprised by the seller’s heated reaction. This casual attitude gets to the heart of the matter. NDAs may look like a mere formality, but for sellers, they’re real serious business.

Illegal Contact

Among the worst violations of confidentiality is when a buyer contacts the seller’s clients directly without authorization. Doing so is neither appropriate nor necessary. Instead, the parties can agree that the seller will retain an external market researcher to survey its clients on their satisfaction, suggestions for improvement, and any other information the buyer deems relevant.

#1) What Lies Ahead

A final source of seller concern is what life will be like after the sale. Well before that date approaches, the buyer owes the seller a series of careful planning sessions to tackle subjects like —

• Duties of key members of the seller’s management team and how they’re compensated;
• How the deal will be announced to employees, clients, and the public;
• Budgets; reporting relationships; employee benefits; hiring/firing plans, etc.;
• Hammering out the “vision thing.”

It may seem obvious, but some buyers don’t place much importance on this post-deal stuff. Maybe that’s because it’s not their company being sold and their job changing?

But buyers have more at stake in ironing out transition details than simply calming the seller’s jittery employees. Ignoring details about something as vital to a seller’s key employees as life after sale is a sure way to curb enthusiasm. Getting them on board post-close also advances the buyer’s own interests by boosting seller morale and reducing post-close turnover.

Recap

We’ve talked about how to avoid the seven deadliest sins M&A buyers commit. That is, how to avoid snatching M&A defeat from the jaws of victory. 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 these mistakes requires only common sense and some experience. Most acquirers with the resources to buy a company likely have common sense. To use it, muzzle the big company culture. Put yourself in the seller’s shoes.

As for the other key resource, experience, retain a professional M&A advisor to help you find suitable targets and navigate to a safe deal landing.

Further Reading

This article explores ways buyers can avoid blowing up deals before they close. That matters little to buyers who successfully close but grossly overpay. Avoiding that is a significant topic in itself. One place to start is So Many M&A Deals Fail Because Companies Overlook This Simple Strategy.

To be clear, of course, sellers aren’t free of sin either. They’ve created their own petards upon which to fall. For a description of where they most frequently go wrong, see our Top 5 Ways Business Owners Kill M&A Deals.

Got questions about how to increase your chances of closing an acquisition? Email us.
Article revised 2/3/26. © 2026 Kuhn Capital, Inc. All Rights Reserved