Deal Fatigue: What Is It and How Can You Avoid It?

Ahhh, deal fatigue. The silent killer of otherwise fantastic transactions. If you are seeing slow responses from either side of the table, there's a possibility your transaction is showing early signs of deal fatigue. It typically sets in a few weeks before the sale is scheduled to close.

Feelings of frustration, irritation - worst of all - resignation, can develop in all parties involved in a transaction. Principals, attorneys and bankers alike are not immune to the experience.  Tensions begin to run high, small issues become large objections and one party (or both) might give push back rather than trying to work through issues that arise.

Prevention is key, as once it sets in it can cause feelings of discontent and quickly sour or kill a deal you've invested months to establish. Anticipating deal fatigue, from which no one is immune, is a smart approach. 

How do you combat it? First, let's evaluate what causes it. Typically an unstructured bidding process is to blame. Your M&A advisor should establish an auction process with set deadlines for initial and "best and final" offers. This facilitates forward movement and speeds things along, avoiding an overly long, drawn-out bidding process. 

Negotiations getting tense? Avoid getting too attached to the specific outcome. Remain positive and focused on problem-solving throughout the process. This will go a long way to resolve issues that inevitably arise.

Another good strategy is to maintain your perspective and a sense of humor. Remember these are humans involved. Futures and finances are at stake, careers and companies are on the table. Communications may get tense from time to time. Focus on why you entered the transaction process in the first place and maintain an optimistic outlook. 

Thankfully, your M&A advisor will be very adept at powering through the rougher spots of the transaction and mitigating difficulties as much as possible. They have seen deal fatigue threaten hundreds of transactions and have developed methods for maintaining positive momentum throughout the sale. They know what strategies are effective at keeping all parties engaged and involved and arriving at a final number and agreement that all satisfy all parties.

By anticipating deal fatigue, understanding the causes and leaning on the professional expertise of your advisor you will successfully navigate the transaction process. Bottom line: be prepared and develop a skilled deal team to head off issues of all varieties before they arise.