It was our first face-to-face meeting with the potential buyer. They were dead keen to meet our client after reviewing the information memorandum. We had teed up a meeting at our offices. Everything seemed to be on track.

The potential buyer arrives. There was the usual exchange of pleasantries and slightly awkward small talk. It was then time to kick things off. We went around the table introducing ourselves. Our client then had the floor to give an overview of his business and to answer any immediate questions.

It was about two minutes into our client’s presentation when things rapidly took an unexpected turn. As he walked through the 30-year history of his business, he started talking about an earlier business that he had sold. Fair enough. A bit of harmless context, I thought.

As the story continued to unfold, however, my client explained that the deal went sour. Very sour. It didn’t take long before lawyers were retained. All communications from then on were to go through them. Weeks of tense, angry discussions ensued. Nothing was resolved.

Amid dangerously high blood pressure and mounting legal fees, the matter eventually made it all the way to the Supreme Court. Eventually, the parties resolved to settle the matter on the courthouse steps. To this day, my client explained, he still hates the bloke. He offered up several choice words to reinforce the point, too.

After his five-minute detour and my futile attempts at kicking him under the table, my client returned to talking about his current business. It was a great business. Highly profitable. Fantastic clients. And it was a great fit for this potential buyer. The synergies were obvious.

The question they had to be asking themselves, though, was whether my client was someone they really wanted to try and do a deal with. What were the chances the term sheet would be signed and then from out of nowhere he would ‘turn’ again like he did 30 years ago? Maybe he was just a litigious loose cannon.

It had to be going through their minds.

Luckily, that deal eventually did go through. Both parties behaved themselves from start to finish and my client is now happily retired. Just don’t ever ask him about the deal from 30 years ago!

However, the courtroom steps story taught me a very important lesson: in M&A, every interaction between a buyer and seller is a highwire act.

All it ever takes is one moment – a hesitation, an overreaction, a wrong answer – and everything can fall apart. All the momentum, all the rapport that had carefully been built up over multiple meetings over multiple weeks or even months can crumble. Instantly.

Why?

Because buying or selling a business is a high-stakes game for both parties. It involves big decisions with major potential consequences. In many ways, particularly buyers, are looking for any sign to pull out – anything that says this seller or their business is not right. The slightest suspicion can outweigh the most complex Excel workbook pointing to the deal “stacking up.”

That’s why having a good adviser is so invaluable – even if they can’t always kick their client under the table. It’s all about having that extra attuned person in the room who can redirect the conversation. They can also – if the worst comes to the worst – make that phone call later that day or the day after to try and clean up a mess.

However, the key lesson from the courtroom steps story is that in every interaction with “the other side” it is essential to remain disciplined and focused. It’s great to build rapport and to try and develop a personal relationship. It’s way more important to not say or do anything that can risk derailing the entire deal. Keep war stories for another day.

To discuss how CFSG can assist you in buying or selling a business, please don’t hesitate to contact us.