Mergers & Acquisitions For Dummies

Chapter 20

Ten Major M&A Errors and How to Avoid Them

IN THIS CHAPTER

Avoiding faulty assumptions about M&A

Knowing when to tell others of the deal

As with many industries, the mergers and acquisitions business is full of errant opinions. People who have never done a deal before can’t possibly know what to expect, and as a result, many people harbor false impressions and incorrect assumptions about M&A. Here are ten of those common errors.

Assuming the Deal Is Done after the LOI Stage

The letter of intent (LOI — see Chapter 13) is a key document because it defines the basics of the deal and essentially becomes the foundation of the purchase agreement. Sellers and Buyers alike often make the mistake of thinking a signed LOI means all the work is done.

The LOI isn’t the final deal. In fact, the LOI simply ushers in a host of work called due diligence and contract writing. The heavy lifting of M&A doesn’t begin until after the LOI is signed.

Being Unprepared for Due Diligence

In my experience, perhaps the number one mistake Sellers make is being unready for the crush of materials they have to provide for due diligence. A Buyer (rightfully, I should add) expects to gain access ...