[Ross Van Allen]

We’ve all seen it in our daily lives as M&A practitioners. The business states a case for a target required to further their goals. The deal team does a market assessment and comes forward with a few potential selections, but has its eyes set on one main target that stands out above all others. The discussions with the target’s leadership have gone well, the financials look in order, the price is right in the sweet spot, and there’s seemingly no downside. Or, well, there is one potential challenge: this date to the dance is entertaining some other suitors. So what does corp dev do? Rushes into LOI negotiations, rushes through DD, and makes decisions based on the fear of missing out, potentially to the detriment of future value creation by overlooking some functional considerations required to achieve full deal success.

My experience is as the procurement workstream lead for M&A, running all the wonderful PMI activities for third-party vendors and the impacts within the finance workstream for both buy- and sell-side deals; and I, like many of you, have felt the weight of these FOMO decisions. Because my focus is on the finance workstream, and primarily the expense side of the equation, my learnings from the first module, ‘Functional Integration,’ were very insightful, particularly for sales strategies and synergies. I always tell my team that each deal we need to look out for the three “Ps”: Policy, Process, and People. Within sales function integration, Policy may not take as big a consideration, but the sales process and the sales People absolutely do! I have seen some terrible integration experiences that can all fall back to one primary issue: a lack of understanding and cohesiveness within the sales process. I find myself somewhat embarrased with knowing my colleagues didn’t consider the cultural aspects of the newly-acquired sales culture when it came to the sales cycle, and how things like cross-selling new (acquisition) product to existing (legacy enterprise) clients can be negatively affected. My own activities in tracking growth requirements with supplier capacity, quality, and willingness for growth have also been affected by not having the strategy fully mapped and known. And it all stems back to a fundamental lack of considering the sales function during the DD process.

I sit back and wonder about the deals I’ve been involved with, where we ended up having to pivot from buy to sell. There’s nothing that makes me more upset than working hard for several months on an integration, getting to know the new colleagues, flying out to their offices to understand who they are as people and what makes them tick, finding ways to drive synergies and make the deal as successful as possible, only to turn around and divest the business unit a year or two later. Could we have done better if corp dev drove a better DD? Could we have identified ways to integrate better to make the deal more successful, or even simply identified that it wasn’t a right fit and that we’re ok being the one without a date on prom night? How would our stock price be different today if we had made better decisions 2-3 years ago? Even though my focus is on procurement activities, I find myself believing that there are things I can do when I get added to the NDA and the data room opens up for DD, to help drive some of these decisions, highlighting the right risks, planning for cultural fit better, and speaking up and speaking out when I feel like we’re making a decision based on the fear of missing out on a deal, rather than the joy of passing on an acquisition that isn’t the right fit.

What are some of the ways in which you have seen your own function affected due to incomplete or poor DD within another function, all because the Corp Dev team or IMO is pushing for a deal to be done faster than you’d prefer due to their FOMO?

[Faisal Alahmed]

I can relate to this—especially the point on FOMO driving decisions before functions are fully understood.

From a commercial perspective, I’ve seen similar issues where revenue synergies looked strong in DD, but the sales process and customer dynamics were not properly assessed. Post-close, this led to slower cross-selling and weaker-than-expected growth because teams operated very differently.

I think one practical way to mitigate this is to bring functional leads into DD earlier and give them a clearer voice in “go/no-go” discussions, not just integration planning. It helps shift the mindset from “we’ll fix it later” to “do we truly understand how this business operates today?”

[Ross Van Allen]

Thank you Faisal,

One of the biggest sea-change efforts in my company was when the decision was made to bring the PMI functional groups forward into the DD process, vs only involving them in handoff at Day 1. You could say it’s…an evolving practice with several areas of opportunity to continue to go forward. But the result of having ~20 people + consultants and lawyers on the NDA and in the data room between LOI and Close to conduct DD, to now having over 150 people has directly resulted in two things: (1) overwhelming targets with information requests and intimidation for the DD process, and (2) far fewer deals closed than anticipated due to the absolute strength of the enhanced DD process yielding more accurate historical numbers and identifying risks in order to allocate costs for risk mitigation as part of the DD process and deal budget. Revenue synergies continue to be the biggest area for enhancement, as they rely as much on strategic cultural alignment and sales planning as absolute “do steps 1, 2, and 3 to achieve risk mitigations A, B, and C” which is seen in the other workstreams. Nevertheless, our DD approach now is far superior to what it was 5 years ago. As a result, I am a big proponent of the belief that integration begins during due diligence, and the mindset of “we’ll fix it later” is actually the mindset of “we don’t really care about achieving the maximum value for our investment”.

[Milou van der Hoek]

Yes, I’ve seen on a number of occasions how process or product red flags get conveniently considered “not that significant” due to FOMO, later turning out to be significant. On the good side, I’ve also seen deal teams walk away from deals that on the service look like the greatest things that could happen, showing me they are trusting data over excitement.

[Edmond Amenyo]

I really like how you framed this around FOMO. Once a target becomes the “one everyone wants,” it can be hard for the deal team to slow down and ask the uncomfortable questions. But those missed questions usually show up later during integration.
From a finance perspective, I can see how poor diligence in one area can create problems in another. A model may assume revenue growth, cross-selling, or cost synergies, but if sales culture, supplier capacity, systems, or operations were not fully understood, those assumptions can fall apart after the deal closes. I agree that functional leads need to speak up early, because sometimes walking away is better than forcing a deal that was never the right fit.

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