Today's Viewpoint: A MarshBerry Publication

Avoiding M&A Buyer’s Remorse: What to Do When a Done Deal Doesn’t Meet Expectations

Chasing dollar signs isn’t always the best strategy for finding the right M&A partner and may lead to post-deal disappointment for both buyer and seller. Find out how to navigate the different buyer types, how to evaluate potential partners, and why having an experienced advisor is critical to a successful deal. 

The stress leading up to a merger and/or acquisition transaction can be tremendous. All parties involved have a lot at stake and no one wants to make a bad decision. Once a deal is done, there is usually a period of relief and some celebration. But this period is short lived, as the next phase of anxiety takes hold: delivering on the expectations of the deal – expectations for collaboration, growth, and profitability. Unfortunately, some post-deal results don’t always meet the expectations of buyers, and even the sellers.

There are plenty of case studies of sellers who tried to navigate a transaction with a potential buyer on their own, without an experienced advisor in their corner. In this current market, there are a lot of hungry buyers courting firms, with very strong sales solutions, telling potential sellers that they don’t need an advisor to help transact the deal. In some of those cases, sellers have backed out at the last minute, recognizing that the buyer wasn’t the right fit or something didn’t feel right. In other cases, there are stories of post-deal regrets because of cultural clashes, or a misunderstanding of what life will look like after the deal. And then in worst case scenarios, the financial performance of the acquired company does not meet expectations which can lead to all parties questioning their decision to partner. 

These M&A buyer’s remorse situations can be circumvented by working with an experienced consultant who can help you navigate the process, avoiding blind spots, and asking the right questions BEFORE engaging with a potential partner. 

Pre-deal tips for evaluating potential partners 

One of MarshBerry’s recommendations is to spend plenty of time building a strategy specific to a potential transaction, which starts with the cliché question, “What are the goals and objectives for potentially partnering with this other company?” After all, as an owner, this may be the most important business decision you will ever make, and you’ll want to make sure it’s the right decision for you and your company.  

Even more important, and as a way to keep the strategic planning conversation pure – remove valuation expectations from the agenda. Pricing and valuation are very important. However, the best transactions from a financial perspective (closing consideration + earnout + value creation) are often created through sellers and buyers gaining significant alignment in expectations, fit, and equitable contribution to performance. If there is alignment around the business strategy of “1+1=3” where two partners believe they can achieve more together than they could on their own, then the economics of the deal will follow. 

Post-deal interaction depends on the type of buyer

Understanding the different types of buyers can also help avoid post-transaction disputes. There is a wide range of buyers in the market today. On one end of the spectrum there are buyers who offer complete autonomy with little post transaction interaction. On the other end of the spectrum there are buyers who offer complete integration with a centralized back-office. There are many buyers in the market today who fall in the middle of the spectrum who offer a hybrid of autonomy and integration. Understanding who the buyers are, how they operate, and where they fall on the spectrum is critical in selecting the potential partners to include in a process which can ultimately lead to higher overall deal performance.

Avoid M&A Buyer’s Remorse with MarshBerry’s Advisory Services

Far too often, firms are too focused on chasing dollar signs without considering the importance of critical culture, operational, and financial alignment. MarshBerry prides itself on its M&A advisory services and helping organizations better educate themselves on answering important questions, being strategic around their transaction, and engaging potential acquirers that align with the overall goals and objectives of their transaction.  

If you have questions about Today’s ViewPoint or would like to learn more about how to navigate the complexities of partnership deal negotiations, email or call Jen Martin, Vice President, at 440.287.6790. 

Investment banking services offered through MarshBerry Capital, LLC, Member FINRA and SIPC, and an affiliate of Marsh, Berry & Co., LLC. 28601 Chagrin Blvd., Suite 400, Woodmere, Ohio 44122 (440.354.3230) 

Contact Jennifer Martin
If you have questions about Today's ViewPoint, or would like to learn more about how MarshBerry can help your firm determine its path forward, please email or call Jennifer Martin, Vice President, at 440.287.6790.

MarshBerry continues to be the #1 sell side advisor in the industry (as ranked by S&P Global). If you’re considering selling your firm, we are the best choice to help you through the complicated process. If you don’t hire MarshBerry, hire a reputable advisor that can help you navigate one of the most important business decisions you will ever make. You will be much better off having an advisor in your corner that knows the industry than trying to do this on your own.