Two Silent Deal Killers in M&A: Emotions and Expectations
When people think about why M&A deals fall apart, they often point to financing issues, legal snags, or due diligence surprises. But in reality, many deals—especially in the Main Street and lower middle market—never make it to closing for reasons that are far more personal: emotions and expectations.
These two forces operate quietly behind the scenes, influencing decisions, delaying progress, and sometimes derailing deals altogether. If you're a business owner preparing to sell, or an advisor guiding clients through the process, understanding these dynamics is essential.
The Reality: Most Deals Don’t Close
According to the Q1 2025 Market Pulse Report from the International Business Brokers Association (IBBA) and M&A Source, only 300 of 358 surveyed advisors reported completed transactions that quarter—suggesting that roughly 16% of initiated deals actually closed.
That means more than 8 out of 10 deals either stalled, collapsed, or never made it past the early stages. And while some of that is due to valuation gaps or financing, a significant portion stems from emotional resistance and misaligned expectations.
Deal Killer #1: Emotions
Selling a business is rarely just a financial transaction. For many owners, it’s the culmination of decades of work, sacrifice, and identity. That emotional weight can surface in unpredictable ways:
Seller’s remorse: Owners may second-guess the sale, especially if retirement, legacy, or succession plans aren’t emotionally resolved.
Control anxiety: Sellers often struggle with the idea of someone else running “their baby,” leading to micromanagement or last-minute demands.
Trust breakdowns: A single misstep—like a delayed response or a perceived slight—can erode trust and stall negotiations.
Advisors should anticipate emotional triggers and build space for them. Acknowledge the human side of the deal, and don’t rush the seller through critical decisions. Sometimes, just validating the seller’s concerns can keep the deal alive.
Deal Killer #2: Expectations
Every deal begins with a vision—but when buyer and seller expectations diverge, friction follows:
Valuation gaps: Sellers often overestimate their business’s worth, while buyers focus on risk and return. This is especially common in owner-operated businesses with emotional attachment to “sweat equity.”
Timeline mismatches: Sellers may expect a quick close; buyers need time for diligence, financing, and approvals. Unrealistic timelines create pressure and frustration.
Post-sale roles: Sellers may assume they’ll stay involved; buyers may want a clean break. If this isn’t clarified early, it can lead to resentment or confusion.
Set expectations early and revisit them often. Use clear LOIs, realistic timelines, and transparent communication to avoid surprises. A well-drafted term sheet can prevent weeks of wasted effort.
How to Defuse These Deal Killers
Pre-deal coaching: Help sellers understand the emotional journey ahead. Consider a “deal readiness” session before listing.
Clear documentation: Use LOIs and term sheets to align expectations before legal spend escalates.
Third-party advisors: CPAs, attorneys, and brokers can act as buffers when emotions run high or expectations drift.
Final Thought
M&A isn’t just about numbers—it’s about people. The best deals happen when emotions are respected and expectations are managed. If you’re preparing to buy or sell a business, don’t just hire a lawyer—hire a guide.
Lomba, P.A. South Florida M&A | Business Law | Deal Structuring