Inside the Deal #1: the M&A deal that fell apart
For several months, the transaction followed a standard M&A process when working with a client. An NDA was in place, due diligence was ongoing, sensitive information was shared in a controlled way, and the buyer had already started discussing post-acquisition integration and the seller’s future role.
Then the buyer changed the course.
“We no longer want to acquire the shares. We want to buy the company’s clients instead.”
The seller addressed the concerns raised during due diligence and even proposed separating the assets the buyer did not want. But shortly afterwards, the buyer walked away from the transaction altogether, this time saying the financials and forecasts were not what it had expected.
By then, however, it had already gained a detailed understanding of the business – its financials, customers, contracts, margins and commercial logic – while operating in the same market.
Maybe the buyer had intended to collect competitive information. Maybe it had not.
The more useful question is why the seller’s protection should depend on knowing the answer.
A well-run M&A process should work even when trust turns out to be misplaced, even when the buyer changes direction, and even when months of negotiations end without a signature. That is why the real value of M&A advice is not limited to drafting documents or helping a deal reach closing. Much of it lies in controlling what happens before anyone knows whether there will be a closing at all.
An NDA is part of that protection, but it is only the beginning. Confidentiality can restrict what the buyer does with the information, but it cannot make the information disappear from someone’s mind once it has been seen. That is why the agreement should also deal with how the information may be used, whether the buyer may approach employees or customers, and what happens to the data if negotiations stop.
The same logic applies to disclosure. A buyer needs enough information to understand the business and form a view on value, but that does not mean every commercially sensitive detail needs to be handed over at the start. Before an LOI, there is rarely a reason to disclose more than what is necessary to establish the basic economics of the transaction. Customer names, individual contracts, client-level margins and other highly sensitive information can wait until the buyer has made a more meaningful commitment.
Due diligence also creates another kind of pressure. When a buyer raises a vague concern, the seller’s instinct is often responding immediately and reassuring them, especially if the transaction already feels close. But that is precise when discipline matters most. Instead of rushing to explain, the seller should ask the buyer to put the issue in writing, define exactly what the problem is, and respond only to that point. Otherwise, every attempt to reassure can become another unnecessary layer of disclosure.
The closer the parties feel to signing, the easier it becomes to blur the line between due diligence and ownership. Invitations to internal meetings, conversations about future roles, and discussions about team integration can make the transaction feel almost inevitable. Yet until the agreements are signed, the buyer is still free to walk away, while the seller is still responsible for protecting an independent business.
That is what makes this case useful.
This transaction did not fail because someone missed a document or misunderstood a clause. The real risk built up gradually, while the process itself seemed to be moving forward. With every additional meeting, piece of information shared and conversation about life after the acquisition, the relationship began to feel more certain than the legal reality actually was.
That is why sellers need to stay conscious of what has already been disclosed and how much the potential buyer now knows about the business. An NDA or LOI is only the starting point, not a green light to disclose everything. Sensitive information should be shared gradually, in line with the buyer’s level of commitment, red flags should be answered carefully, and integration discussions should not move ahead of the legal process.
Good M&A advice is more about making sure the seller remains protected if the deal doesn’t happen.
Complex M&A situations like this are part of our day-to-day work. If you are entering a transaction and want to make sure the process protects you at every stage, you know where to find us.
