Top Reasons Why Deals Fail Today

733Park Podcast Plug-In: Top reasons why deals fail today

In this week's 733Park Podcast Plug-In, we check out The Tech M&A Podcast episode "Tech M&A Monthly: 5 Reasons Why Deals Fail Today." The Tech M&A Podcast discusses the latest trends and mergers and acquisitions in the technology industry.

Let's dive into the episode

M&A in the tech industry is the busiest it has ever been since the dot-com era. There are far more buyers and sellers excited about growth opportunities, which has led to quicker and greater deal closings. Since the pandemic, strategic buyers like Microsoft have been acting faster and more aggressively when valuable opportunities present themselves, and firms that usually wouldn't be involved in tech M&A are now participating to take advantage of profitable, growing tech trends.

Top 5 reasons why tech deals fail today

1. Lack of honesty: not being truthful about pending litigation, regulator issues, partnerships, or licensing problems ruins deals. Uncovering red flags toward the end or after a deal spoils the relationship, and you'll probably be working with those you sold to after the deal.
2. Presenting unrealistic projections: too often the biggest issue in due diligence is that the seller's financials were wrong or fell short of projections. Not hitting your numbers is alarming and will require explaining.
3. Lack of answers and proof: answering any questions a buyer asks and showing proof is crucial. Responding with "we don't have that answer" undermines and delays a deal.
4. Only one buyer: you should always be talking with multiple buyers. Without the leverage of other bidders, it's hard to get the right price and structure. Creating competition drives prices up.
5. Bad storytelling: overusing abstract concepts and statistics takes away from the story of what you do. Be straightforward and relatable, because people won't invest in something they can't understand.