What are some common M&A “deal killers”?

Some common deal killers include:

  • Valuation disagreements

  • Due diligence issues: things like financial discrepancies, legal problems, operational challenges, or undisclosed liabilities. Significant concerns can cause a buyer to renegotiate the deal terms or walk away altogether.

  • Financing problems: Buyers may face challenges in securing financing for the transaction

  • Earn-out disagreements: Earn-outs are contingent payments based on the target company's future performance. Disagreements over the structure, terms, or performance metrics of an earn-out can be deal breakers.

  • Key employee retention

  • Indemnification and representations/warranties disputes: Disagreements over the scope and extent of indemnification provisions and presentations/warranties can create friction between the buyer and seller.

  • Cold feet or loss of interest: Either the buyer or seller may experience a change of heart or loss of interest in the transaction for various reasons, including changes in market conditions or strategic priorities.

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