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5 Ways to Prevent Deal Fatigue When Negotiating A Transaction

By January 26, 2022February 21st, 2022No Comments

Negotiating a company sale can be a long and arduous process on both sides of the transaction. “Deal fatigue” is a common feeling that can arise during drawn out negotiations where participants feel discouraged and frustrated while trying to reach an agreement. It occurs most when one side or the other digs their heels in about certain positions and can’t come to a consensus. At best, it’s an annoyance – at worst, it can cause a potential deal to fall apart.

But the good news is there are preventative measures you can take to combat deal fatigue. Here are five impactful ways dealmakers can prevent deal fatigue and have a successful transaction.

  1. Set A Good Deal Foundation

    They key to a successful transaction is preparation. Negotiations are going to require that you disclose information, whether you are the buyer or seller. Before the deal even starts, work with your team or an advisor to prepare the information necessary. And have the subject matter experts on hand who can help you in the process and answer questions.

    For the buyer, this may be gathering a trusted team and appointing a point person to represent the company in communications with the seller. Also gathering the financial history that any seller or third-party valuator will need. For the seller, this includes completing audits and business appraisals before the negotiation period.

    If you take these steps before the process starts, you’ll be in a good position to avoid deal fatigue and close your transaction sooner.

  1. Make Sure the Market Is Ready

    Preventing deal fatigue might also involve asking a basic question – is this the right market to be entering into a deal? If the current market is volatile or not a good environment for a transaction, you might want to rethink your plan. Here are some important market factors to consider before entering into a sale:

    • Interest rates and cost of lending
    • Tax rates or upcoming changes
    • The competitive landscape
    • The job market/how hard it is to fill open positions
  1. Have a Timeline

    Another way you can set yourself up to prevent deal fatigue is creating a timeline that considers factors like your reasons for selling, how long it will take to procure data, etc. Oftentimes negotiations will move from one step to another without a clear ending in sight. Instead, getting a consensus from the start will help avoid this. Holding firm to your predetermined timeline – within reason – is a key way to prevent deal fatigue.

  1. Communicate Often

    It’s hardly a surprise that clear communication between buyer and seller is vital to the success of a deal. A dedicated project manager who can act as point person is essential to this. That person can then coordinate status calls, meetings, and task lists. Both parties need to be kept updated and provide information as needed, while being willing to coordinate even when both sides are busy.

  1. Have a Team of Trusted Experts

    Advisors and experts can play a huge role in preventing deal fatigue. Each side can use the help of valuation specialists, advisors, legal representation, and accounting professionals to make the transition smooth. They can help you objectively value the business and arrive at a sale price that is acceptable to everyone involved.

While mergers and acquisitions can feel like a long and arduous process, if you take measures to prevent deal fatigue you can avoid a lot of headaches, fast starts, and dead ends – and ultimately close your transaction sooner.