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Avoid Deal Fatigue

It can be avoided by taking the right preparatory steps in your company sale

Deal fatigue is when the acquirer and/or the seller grow tired of the transaction process and often results in either withdrawing from the process. It most often occurs because the initial excitement of doing the deal wanes as both parties move through the exit process. You won’t generally see deal fatigue occurring in the first stage of the parties discussing and agreeing on the key deal points, but it occurs most often during the stage of due diligence or the final stage of negotiating final deal legal documents.

You would think deal fatigue would be uncommon but it’s not. It can be quite common especially in deals where the seller hasn’t effectively prepared for the sale. Here are common causes of deal fatigue:

  • The initial acquisition offer negotiated is too vague between the parties and both assume that the details will be hashed out later in the process by the lawyers. A seller and acquirer should both focus early on ensuring they establish a detailed offer document.
  • Acquirer or seller aren’t fully committed to applying the essential resources needed to move the deal process along efficiently and effectively. This could be because either party has other priorities and isn’t able to focus their people (employees or third parties) on expediting an efficient deal process. For the seller, it’s key to ask the acquirer early in the acquisition discussion whether they can apply the necessary resources (their employees and third party partners they will be engaging to do the deal) to move the deal along efficiently. And the acquirer will ask the same of you as the seller.
  • The seller isn’t fully prepared to support the acquirer’s due diligence data requirements. We tell our clients early on that they will have two decisions to make one day. The first is the decision to sell. The second is the decision as to whether their team and business are ready to support the acquirer’s due diligence timeline. Conducting a due diligence dress rehearsal at least six months prior to beginning the sale process is important to avoid this potential cause of deal fatigue.
  • Deal negotiating that too early on gets controlled by lawyers or accountants. This is a common cause of fatigue if the principal of the seller and the principal of the acquirer move the deal discussions and negotiations too early on to third parties like lawyers and accountants. Principals should work together to establish the key deal points, certainly with the help of an M&A lawyer but they should not be playing point position at this early stage. Principals should first agree upon deal points such as deal valuation and methodology for establishing the value, deal structure, source of funds, working capital adjustment approach that will be used, due diligence timeframe and process, assimilation plans for seller employees and facilities and other key deal points. In the most efficient deals, these points are negotiated in concept first by the principals and captured in an Indication of Interest or better yet the more detailed Letter of Intent and then this is handed to the lawyers and accountants to execute on.
  • A seller or acquirer who keeps changing initially agreed upon deal points or who too late in the process introduces new critical deal points so that either party begins to feel like the deal keeps changing. It’s most often the seller that causes this and it’s because they weren’t well prepared in identifying what their critical deal points were going to be before starting the acquisition discussions.

Optimize your exit preparation to ensure you and your team aren’t the cause of deal fatigue. Talk with an exit planning professional like Yosemite Associates to ensure that your deal won’t fall into the normal traps that cause deal fatigue. With the right exit preparation, or what we call exit optimization, you can reach your desired euphoric exit.

Use Greenpoint Testing to Achieve Your Desired Exit Valuation

It only takes 106 questions, scanning 10 essential business functions, to stress test your readiness for a successful exit.

However, these questions require thoughtful commitment to achieve your desired exit valuation.

During this up to hour-long online testing, you'll see questions such as the following.

Sample Question 02

After internalizing each question, select among three answer options – Agree, Unsure and Don’t Agree – choosing the answer which best describes you and your business.

Then, complete the Greenpoint questionnaire to unlock your personalized report, which will reveal any gaps in your planning, pointing to the action steps needed to maximize your desired exit valuation.

Format: Digital

Delivery method: Email

Report included: Your Greenpoint results

Stethoscope Frees You to Work On Your Business, Beyond In It

120 questions, scanning 10 essential business functions, free you to work ON your business, rather than solely IN your business.

With each question requiring thoughtful commitment to identify opportunities to further your success.

During this up to hour-long digital Q&A, you'll see questions such as the following:

Sample Question 02

After internalizing each question, select among three answer options – Agree, Unsure and Don’t Agree – choosing the answer which best describes you and your business.

Complete the Stethoscope questionnaire to unlock your personalized report, which will expose gaps [if any] in your planning, and tips for future growth, resulting in action steps needed to maximize your thinking as a business leader.

Format: Digital

Delivery method: Email

Report included: Your Stethoscope results

Be Ready for The Probe of Due Diligence

109 questions, scanning 10 essential due diligence disciplines, to prepare for a roadblock free Probe of your business in anticipation of sale.

And to potentially increase the value of your business by your professional transparency.

With each question requiring thoughtful commitment to identify opportunities to further your success.

During this up to hour-long digital Q&A, you'll see questions such as the following:

Sample Question 02

After internalizing each question, select among three answer options – Agree, Unsure and Don’t Agree – choosing the answer which best describes you and your business.

Complete the Probe Diagnostic Tool questionnaire to unlock your personalized report, which will expose gaps [if any] in your planning for a due diligence Probe, resulting in action steps needed to maximize your readiness when diligence is due.

Format: Digital

Delivery method: Email

Report included: Your Probe results