The Dangers of Deal Fatigue: Why Patience and Discipline Are Key to Successful

Selling a business is demanding, and even experienced owners can feel worn down as negotiations drag on and timelines slip. This exhaustion, known as deal fatigue, often leads sellers to compromise on value, accept weaker terms, or walk away from deals that could have closed successfully. Avoiding these outcomes starts with preparation, realistic expectations, and a clearly defined process.

The 2 Biggest Reasons Deals Stall or Fall Apart

The most common causes of deal fatigue are unforeseen issues between the buyer and seller, as well as misguided or unfulfilled expectations regarding the sale’s speed.

1. Unforeseen issues

Deal fatigue that occurs when sellers and buyers reach an impasse on an issue, where each is entrenched behind their line in the sand, can be a challenging hurdle. One way to interpret these circumstances that helps keep things in perspective is to view unforeseen impasses as demonstrating a gap in the ‘meeting of the minds’ between the sellers and the buyers. Effectively, this means that the deal concept, terms or structure struck at the outset either wasn’t truly mutual, was understood differently by the parties, or was somehow affected by an unforeseen complication or discovery.

2. Speed and timetable disappointments.

Failure to communicate a clear timetable, both internally and externally, with the other side of a deal, can hamstring the sale process, causing deal fatigue. Like an engineering project, each piece of the deal, every nut and bolt, every piece of paper, takes time and has its role in the ultimate success. Having unrealistic expectations for speed can drive a wedge between the parties and irreparably damage one side’s confidence and motivation to complete a sale.

How Planning Impacts the Buyer’s Perception of Value

It should be no surprise that the best way to prevent deal fatigue when selling your business is to work with expert sell-side advisors who can get the details right from the outset. Before ever reaching out to potential buyers, expert sell-side advisors like Optima Mergers & Acquisitions work with business owners to get their house in order. This process is far more than merely ‘staging’ as with the sale of an actual house. Rather, it is a detailed preparation of the record-keeping, analysis, and operations of the company to make it both look and become more valuable and more attractive to potential buyers on a deep and detailed level. Nice throw pillows and a fresh coat of paint simply don’t cut it when getting ready to sell the company that you’ve worked so hard to make a success.

4 Key Steps to Prep Your Business for Sale and Prevent Deal Fatigue

Here are some areas where you can expect Optima Mergers & Acquisitions to work with you long in advance of successfully taking your company to market:

1. Thorough internal due diligence: Internal due diligence is an important guidepost for the complexities of an upcoming sale negotiation and therefore for setting realistic expectations for timing and speed for both sellers and the buyers.
2. Well-prepared financials, both current and historical: Providing assiduously and professionally prepared financial statements demonstrating the company’s performance over the length of management and ownership by the sellers is a compelling way to start a transaction off on the right foot. Including background information like projections, balance sheets, materials provided to lenders, and other data available can forestall problems and address questions with ease. The importance of well-prepared financials is a consistent message for Optima Mergers & Acquisitions with our sell-side clients.
3. Defensible company valuations: As in the case of providing background information and data for company financials, the basis for the valuations used to establish the asking price for the sale of an enterprise helps potential buyers understand the perspective of the sellers and facilitates the creation of a term sheet and letter of intent that reflects a solid understanding between the parties.
4. A clear Letter of Intent: Including mutually acceptable timetable and conditions for closing in a Letter of Intent is not merely appropriate for mergers and acquisitions of multi-billion-dollar companies. The sale and acquisition of small and mid-cap companies, particularly when being sold by company founders, can be and feel personal, so a clear “LOI” is exceptionally helpful – both internally for the seller and externally in terms of the process with the buyer.

Setting Expectations with Your Advisor

Working with your sell-side advisor to gain a clear, detailed understanding of the process and developing a reasonable timetable for selling your business breeds patience and confidence. Notably, this is true for the buyer as well. As described above, the companion dynamics of (i) shoring-up the buyer’s confidence in the seller and the way in which they have managed the business, and (ii) enhancing the buyer’s confidence that the valuation prepared by the seller and their advisors represents a fair basis for the sale price goes a long way towards establishing patience and confidence with the buyer and so can prevent buy-side deal fatigue. Making a plan for preparing and bringing your company to market is a core component of the role of experienced sell-side advisors, and it is what enables them to counsel their clients towards realistic expectations for the entirety of the process.

Trust in Your Sell-Side Advisor

Time-sensitive responsiveness, clear communication of issues and processes, and proactive and disciplined messaging require constant vigilance, especially as deals take longer than expected. When everyone understands the process for each puzzle piece and has confidence in the people responsible for each deliverable, every deal has a fighting chance of a mutually satisfactory closing. Working with experienced sell-side advisors who earn your trust at every step of the process from the outset is the best way to remain outcome-oriented and prevent deal fatigue.

At Optima Mergers & Acquisitions, we know what pace of progress is normal and what is worrisome, what the potential bumps in the road may be, and what sellers can do to keep the wheels in motion and on target to avoid deal fatigue. Get in touch with us today to start preparing for a satisfying and fruitful sale of your business.