How to handle lack of information and unwillingness from seller in the DD phase?
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Hi all,
I’m curious how you would handle unwillingness of the seller in sharing (almost any) information in the DD phase? What would be your steps and how would you approach the seller?
Thanks!
The seller’s reluctance to transparently share all relevant information is definitely a red flag. Proceeding with the acquisition without full transparency poses significant risks. In my view, this is a take-it-or-leave-it situation: either we have open, complete communication, or we consider a more assertive approach, such as a hostile takeover. This would involve engaging key stakeholders or potentially aligning with members of the management who are genuinely interested in driving improvements.
A very important topic for discussion! Lack of information and seller unwillingness to cooperate at the Due Diligence stage are indeed among the most difficult challenges in M&A transactions. Effective strategies, such as clear terms in the confidentiality agreement and active communication through intermediaries, can help mitigate these problems. It would be useful to hear the experiences of other participants, especially examples where creative approaches or legal tools helped to cope with such situations. In your opinion, are there universal methods for preventing such difficulties at the initial stage of negotiations?
Handling a seller’s reluctance to share information during due diligence requires a balanced approach. First, I would build rapport and emphasize the mutual benefits of transparency, explaining how sharing information facilitates a smoother transaction. If resistance persists, I would identify specific critical data needs, prioritize them, and propose solutions to address the seller’s concerns, such as confidentiality agreements or phased disclosures.
If the seller not willing in DD and steel if the buyer is in need of the target company , it may use indirect method of assessing the information about the company.
– If you ask for example the competitors about the target company they may inform you its strength and weakness.
-The other method may be asking old staff of the company or make them part of DD
– Search of any news on the company, print outs,
-Any legal case it has may be searched from court house
– Any tax information from government office
– We may arrange a negotiator between the target company and the buyer so that the confidence may increase.
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