Deal fatigue is a condition that can arise during negotiations where involved parties begin to feel exhausted, discouraged, and frustrated in their attempt to reach an agreement. The negotiation process can sometimes be lengthy and demanding and requires players to spend valuable resources such as time, money, and energy. The inability to compromise in such negotiations not only depletes these resources but also can ultimately lead to a potential deal falling apart. Deal fatigue is a common obstacle in the world of mergers and acquisitions, one that both buyers and sellers alike have faced. From this, however, dealmakers around the globe have observed a few preventive measures that can be taken to ensure a successful transaction.
Before the Deal
Preparing for a transaction before it has even begun may seem premature but having tools at the ready when it comes time to execute is essential. Readily available information, subject matter experts, and time and finances for buyers and sellers can set the foundation for an efficient and amicable deal. For the seller, completing relevant audits, appraisals, or business adjustments before entering a negotiation allows for a timely flow of information that can keep an active acquirer engaged and determined. For the buyer, securing funding and a trusted team of financial and legal counsel beforehand can ease the due diligence process and provide peace of mind to the target. In addition to each side preparing themselves, confirming the market is a suitable environment for both parties is crucial. The market can determine many factors that affect mergers and acquisitions, such as the cost of lending, taxes, and competitive landscapes.
During the Deal
The risk of deal fatigue arises when active negotiations begin but holding firm to a predetermined timeline and being willing to compromise within reason can make a world of difference. Maintaining strong communication between everyone involved is vital, such as having designated roles for each aspect of the process and establishing a contact line between buyer and seller. Parties on both sides of the deal should work to keep each other updated on the status and provide information or advice when requested, but still be willing to coordinate with the other’s availability. The ability to understand and empathize on both sides will not only aid in the process but also lay the foundation for a harmonious and synergistic business relationship.
The value of a company is—more often than not—the cause for tension in negotiations. Disagreement between buyer and seller on price can be a main factor in prolonging the process. Valuation specialists, business advisors, and accountants can play a key role in reaching a fair number and dividing work amongst a team is always encouraged. Both buyers and sellers should have a trusted team of experts that can objectively value the business and maintain realistic expectations entering the deal. Reaching a deal can sometimes seem like climbing a mountain, but a strong support system, stamina, and a little compromise can go a long way.
After the Deal
Celebrations are in order! An agreement has been reached, and the papers have been signed. Of course, some deals may have more bumps in the road than others, but in the end, everyone should walk away happy. Negotiation is no easy job, but with the right preparation and determination, the deal of your dreams is possible.
Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com
Europe: Michael Lawrie at +44 (0) 161 359 4400 / Lawrie@BenchmarkIntl.com
Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com
ABOUT BENCHMARK INTERNATIONAL
Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $7B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 14 offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.