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How M&A Deals Can Go Wrong


Mergers and acquisition deals are some of the most complex in the business world. There are many points along the way where things can get off track, and even your mindset can contribute to the success (or failure) of the deal. Here are some of the most common pitfalls of M&A deals you should try to avoid.

1. Too Many Delays

Deals like an M&A can have any myriad of things that come up to delay the process. This is totally normal. However, the saying that you need to strike while the iron is hot definitely applies here. When negotiations go on for too long, something called "deal fatigue" can occur in one or both parties. This condition means at least one side is frustrated with the process and they might lose interest in the M&A itself if it seems like it will be too challenging to get the deal pushed through to fruition. Fighting deal fatigue is tough because once a party has made up their mind that the deal isn't worth it anymore, it can be hard to change their mind.

2. Not Ready To Let The Company Go

Some business owners think they are ready to sell their "baby," especially when they consider the possibility of a huge payout. However, some business owners haven't prepared themselves for the fact that selling the company might mean losing control over what they have worked so hard for. They also may not be prepared for the harsh scrutiny, examination and possible criticism that can occur from potential buyers. Business owners and their teams need to be prepared for this not only with great counter-arguments but also with mental resolve that won't leave them with a bruised ego at the end of the day.

3. Not Being Flexible on the Terms of the Deal

Have you ever watched the show Shark Tank? It stars 4-5 celebrity investors who see regular Joes put on presentations about their great ideas. They invest in some of the projects and pass on others. If you watch the show, you will probably notice that one of the common reasons for passing on a business is if the business owner is too inflexible and won't budge from their desired terms. It's a great idea to have a range of terms you will accept for an M&A, instead of just one solid number that you won't budge from.

4. Working With the Wrong People

When you are part of an M&A, you will have some people helping you. You will need an attorney, and you may have at least one advisor or consultant working on the deal as well. A business' choice of these professionals is very important. You don't want to pick your brother-in-law who specializes in real estate law. You need someone who has worked on this type of deal before.

As for the advisor, you will want someone with extensive experience with M&As, not someone who is just starting out in the field. They should have a proven track record of knowing common problems in the process and nipping them in the bud.

These common hazards can apply to any merger and acquisition deal in any industry. Avoid these pitfalls to make an M&A deal go smoothly.

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