M&A Monday: Five Techniques for Resolving an Impasse

On almost every M&A deal, there is an impasse between the buyer and seller on certain terms. This could be a dispute over any number of hundreds of issues, like, working capital target, seller transition services, rollover terms (minority protections), security terms of a promissory note, etc. I posted about technical tools of bridging a purchase price divide (https://x.com/Eli_Albrecht/status/1716546984746614922), and I will post on how to resolve other specific issues, but this post will address what to do when you have tried to resolve the issue and there is an impasse that risks killing the deal. This post is focused on Buyers.

1. A Seller’s Advisor is a Buyer’s Best Friend. Buyers often underutilize the relationship with a seller’s broker. Often they connect with the advisor throughout the LOI process, then the communication drops off. Make sure to maintain frequent communication with the broker. Actively work to build trust and a relationship. I had a client that met with the broker every Sunday night for drinks. Like my mother says, don’t just call when there is a problem.

When an impasse occurs, the seller advisor often has the trust of the seller and can help resolve the issue. They will not convince the seller you are right, but will often be able to come up with constructive solutions. Unfortunately, I have seen seller’s brokers lose credibility when sellers feel they are pushing them into a bad deal.

2. Direct to Seller. Buyers are often nervous to communicate directly with sellers and often leave it up to lawyers or advisors. There is no more powerful way of resolving an issue than buyer and seller discussing it together. Preferably, face-to-face in the same room. Go read: Private Equity Story Time: Beer and Tacos (https://x.com/Eli_Albrecht/status/1752442130499359127). Of course, this assumes the lawyers and advisors have also tried to do the same.

3. Does it Really Matter? I was on the phone with my client last week and he was stressing about an impasse over the definition of fraud. I asked him, does it really matter? What are the universes that it could matter? How much could it matter? Once we talked about it, he decided, it did not matter that much. So often, we get entrenched and are willing to kill a deal over issues that really do not matter (I am looking at you as well, lawyers). A good buyer knows when to step back and determine if an issue is really as big of a deal as it seems.

4. Expect the Impasse. The reality of deals is there will almost certainly be an impasse. Expect it and prepare for it. One of the ways to do this is to keep an issue in your pocket for when the impasse arises. This is the same strategy I discussed for the phenomenon I named the Seller Death Spiral. Maybe you can offer a sweetener in the consulting agreement for a seller. Maybe you can give an employment agreement or management incentive units to a family member or key employee the seller likes, or maybe you have room to add a few dollars to the promissory note or rollover. Keep something like this in your back pocket and when there is really an impasse, you can whip it out and present it as the way forward.

5. Be Willing to Walk. This is the hardest thing in the world after you love the business and have tens of thousands in sunk cost. However, sometimes, if you are not willing to walk, a certain seller will come up with more and more issues. There comes a time when walking is the best strategy. There is no more impactful negotiating strategy. It is a high-risk strategy and (in my opinion) should be a last resort. I find a collaborative process is much more successful and results in better terms, but sometimes walking away is the best path forward. Three months ago we closed a deal that was on the rocks for months. The seller was coming up with issue after issue and retrading fundamental economic terms. Finally, the buyer walked. A month later the seller came back and we sailed to closing two weeks later with zero issues.

After closing over a hundred deals and over $40 billion in M&A, these are some of the strategies I have found to work.

If you are looking for an M&A lawyer for your deal, you can reach out to me directly at redacted

1. A Seller’s Advisor is a Buyer’s Best Friend. Buyers often underutilize the relationship with a seller’s broker. Often they connect with the advisor throughout the LOI process, then the communication drops off. Make sure to maintain frequent communication with the broker. Actively work to build trust and a relationship. I had a client that met with the broker every Sunday night for drinks. Like my mother says, don’t just call when there is a problem.

When an impasse occurs, the seller advisor often has the trust of the seller and can help resolve the issue. They will not convince the seller you are right, but will often be able to come up with constructive solutions. Unfortunately, I have seen seller’s brokers lose credibility when sellers feel they are pushing them into a bad deal.

2. Direct to Seller. Buyers are often nervous to communicate directly with sellers and often leave it up to lawyers or advisors. There is no more powerful way of resolving an issue than buyer and seller discussing it together. Preferably, face-to-face in the same room. Go read: Private Equity Story Time: Beer and Tacos. Of course, this assumes the lawyers and advisors have also tried to do the same.

3. Does it Really Matter? I was on the phone with my client last week and he was stressing about an impasse over the definition of fraud. I asked him, does it really matter? What are the universes that it could matter? How much could it matter? Once we talked about it, he decided, it did not matter that much. So often, we get entrenched and are willing to kill a deal over issues that really do not matter (I am looking at you as well, lawyers). A good buyer knows when to step back and determine if an issue is really as big of a deal as it seems.

4. Expect the Impasse. The reality of deals is there will almost certainly be an impasse. Expect it and prepare for it. One of the ways to do this is to keep an issue in your pocket for when the impasse arises. This is the same strategy I discussed for the phenomenon I named the Seller Death Spiral. Maybe you can offer a sweetener in the consulting agreement for a seller. Maybe you can give an employment agreement or management incentive units to a family member or key employee the seller likes, or maybe you have room to add a few dollars to the promissory note or rollover. Keep something like this in your back pocket and when there is really an impasse, you can whip it out and present it as the way forward.

5. Be Willing to Walk. This is the hardest thing in the world after you love the business and have tens of thousands in sunk cost. However, sometimes, if you are not willing to walk, a certain seller will come up with more and more issues. There comes a time when walking is the best strategy. There is no more impactful negotiating strategy. It is a high-risk strategy and (in my opinion) should be a last resort. I find a collaborative process is much more successful and results in better terms, but sometimes walking away is the best path forward. Three months ago we closed a deal that was on the rocks for months. The seller was coming up with issue after issue and retrading fundamental economic terms. Finally, the buyer walked. A month later the seller came back and we sailed to closing two weeks later with zero issues.

After closing over a hundred deals and over $40 billion in M&A in my career, these are some of the strategies I have found to work.

If you are looking for an M&A lawyer for your deal, you can reach out to me directly at redacted