Avoiding Deal Fatigue - FPT M&A Playbook

Posted by James Fisher, JD on May 15, 2023 9:30:00 AM

In this M&A Playbook episode James Fisher, JD, VP of M&A and Principal at FP Transitions, shares insight on one of the biggest threats to your transaction–deal fatigue."I wanted to share with you some thoughts I have regarding deal fatigue. In my experience M&A transactions have become more complex over the last five years, which in turn has often increased the time it takes to complete a transaction. 

Given this increase in complexity and timing, deal fatigue at some level is almost impossible to avoid. But if caught early, it can almost always be successfully managed. There are of course many causes of deal fatigue, but some of the most common causes I see and assisting clients at FP are the time it takes to get a transaction to completion: 

  • Unending deal term negotiations
  • Lack of a defined process
  • Lack of transparency in the process itself
  • Lack of communication between the parties.

As for the timing of a transaction, the longer a transaction drags on without a clear and defined path to completion deal fatigue is certainly going to become a disruptive force.

This is not to say you should rush through a transaction to avoid deal fatigue, but you should have defined milestones and goals. A checklist of task to be completed and meet regularly to ensure the transaction is remaining on schedule.

As for deal term negotiations, it is important to spend the time necessary negotiating the salient deal points to be included in the LOI that will later be incorporated into the final deal documents. However, once the LOI is signed, the negotiation over the agreed to deal terms needs to cease. Time and time again, we see parties using the preparation of the legal documents as an opportunity to renegotiate deal terms. Using the drafting of the deal documents to get a second bite at previously determined deal terms can cause significant frustration and create strain and distrust among the parties.

The point I want to convey today is that deal fatigue doesn't have to be a deal killer if caught early and properly managed. There are many techniques that can be used to manage deal fatigue, but some of these techniques if not deployed properly and at the right time may actually exacerbate the problem managing an M&A transaction in the wealth management space is much more complex now than it was five years ago.

I encourage any firm that is not experienced in M&A transactions to employ an experienced M&A consulting firm like FP Transitions to provide you with expert consultative guidance. Doing so will relieve pressure on the parties and significantly increase the likelihood of successfully completing the desired transaction.

If you have any questions or would like to discuss how FP can assist you with an M&A transaction give us a call."

If you have any questions, or would like to discuss how FP can assist you in sourcing that ideal acquisition or merger partner for your firm, give us a call at 800.934.3303

Click below to dig deeper into how you can mitigate common causes of deal fatigue to ensure a smooth transaction.

Surviving Deal Fatigue - Newsletter Image


Topics: Acquisition, Deal Structure, Buying & Selling, Mergers