M&A Deal Killers: The Top 7 Reason Deals Fall Apart

Mergers and Acquisition activity in the staffing industry continues to be highly sought-after. If you are an owner thinking of making an exit or an acquisition, it’s best to educate yourself on how to ensure your deal flows seamlessly.

Here are the top seven reasons why deals fall apart:

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  1. Due diligence is one of the most crucial stages in an M&A transaction and is the stage with the highest probability of a deal falling apart. Buyers expect that all the cards are laid on the table during negotiations, and finding unanticipated issues could lead to questioning of trust and credibility. Transparency is key. 

  2. While it is vital to show buyers that your staffing firm’s financial future has strong potential, these projections mustn’t overshoot reality. Show realistic targets and can provide the historical data to back it up. 

  3. While time’s detrimental effects on a successful business deal closing are common knowledge, more often than not, it is still overlooked. Excessive time in posturing and decision-making can also dampen the speed of the transaction. 

  4. A company is nothing without its people. To perpetuate trust and to sustain an engaging culture, communicate, communicate, communicate. Be proactive and authentic in your communication and convey your goals and objectives with tact.

  5. Deal fatigue is quite common in mergers and acquisitions. To avoid these pitfalls that are symptomatic to deal with fatigue, it is essential to assign a competent deal advisor who specializes in the field to design the deal process and structure with the proper foundation.

  6. There are several M&A horror stories about sellers pulling out of a deal at the very last minute. Before even going to market, sellers should already inspect market conditions, get an idea of buying multiples, consult with their team as well as third-party advisors to ensure that selling is what they want. 

  7. When buying or selling a staffing firm, having a competent advisor on your side is an invaluable asset. Hire a broker who is knowledgeable in the Staffing & Recruiting space and shows appropriate posture and acumen throughout the M&A process.

To read the full article written on SIA’s The Staffing Stream, click here

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