The Top 5 Mistakes Sellers Make in M&A Deals - and How to Avoid Them

Selling your business is often the biggest financial transaction of your life. For most small business owners, it’s the culmination of decades of work.

 Yet, even the most savvy owners can make mistakes during the M&A process that leave value on the table or create unnecessary headaches after closing. In my 25 years of experience, we’ve guided countless sellers through this process, and have seen some consistent patterns emerge.

 The good news? Most of the common pitfalls are avoidable, but you need to know what to look for and prepare accordingly. Here are the five most common mistakes that I have seen sellers make, why they happen, and how to avoid them.

1.        Taking Information at Face Value

‍Why it happens:
In the excitement of a potential deal, sellers often take the buyer’s statements about financing, timelines, etc. all at face value. This can be especially risky, as many times, you’re hearing what I call the “third-party version” of a story: where details have been filtered through advisors or intermediaries.

 The risk:
If you don’t verify what you’re told, you could base major decisions on incomplete or inaccurate information, which can delay or derail the transaction.

 How to avoid it:

• Trust, but verify. Always confirm material facts directly with the source (in writing).

• Ask for documentation to back up key claims (e.g., financing commitments, client contracts).

• Use your own advisors to cross-check information independently.

2.        Skipping Reference Checks

Why it happens:
Many owners assume that if a buyer has the capital and a reputable law firm, they must be valuable to work with. However, personality fit, operational style, and cultural alignment matter just as much, and these are things you won’t find in a balance sheet.

 The risk:
A poor match can turn integration into a painful process, lead to turnover among your team, or even tank the deal before close.

How to avoid it:

• Speak with other business owners who have sold to the buyer. Ask candid questions about what went well and what they’d do differently.
• Inquire about red flags, such as missed earn-out payments, unrealistic integration timelines, or abrupt leadership changes.
• If possible, talk to former employees of companies the buyer has acquired.

3.        Not Preparing Employees for the Transition

‍Why it happens:
Sellers often keep a tight lid on M&A discussions until late in the process due to fear of distracting or worrying their teams. While confidentiality is important, waiting until the last minute to prepare employees can backfire.

 The risk:
Without preparation, employees may feel blindsided, anxious about their jobs,or resistant to new ownership, all of which can impact performance and customer relationships during a critical period.

How to avoid it:

• Identify a small group of trusted managers early in the process to help plan the transition.
• Develop a communication plan that balances confidentiality with transparency.
• Provide clear information about what will change (and what won’t) as soon as it’s appropriate.

4.        Underestimating the Due Diligence Process

Why it happens:
Owners sometimes think of due diligence as just “paperwork” after the real deal-making is done. In reality, diligence can be the most intense part of the process. This is also the place where deals most often stall or fall apart.

The risk:
If your financials, contracts, or compliance documentation aren’t in order, youcan lose credibility with the buyer, slow the timeline, and risk re-negotiated terms.

How to avoid it:

• Work with your CPA and legal team to make sure all records are complete, accurate, and accessible as soon as possible.
• Anticipate the buyer’s questions and address potential issues proactively.

5.        Focusing Solely on Price

Why it happens:

It’s natural to fixate on the headline number when selling your business. But, other deal terms can havejust as much impact on your outcome.

The risk:
A high headline price tied to an aggressive earn-out, restrictive non-compete, or heavy escrow holdback may end up yielding less than a lower-priced deal with more favorable terms.

‍How to avoid it

• Evaluate offers holistically, considering structure, timing of payments, tax implications, and post-sale commitments.
• Work with experienced M&A advisors who can model different scenarios.
• Negotiate for terms that align with your personal and financial goals.

Selling your business is as much about preparation and perspective as it is about negotiation. By avoiding common mistakes like verifying information, checking references, preparing employees, etc. you put yourself in a stronger position to achieve the outcome you want.

Sellers deserve to enter the M&A process fully informed and well-prepared. That’s how you protect the value you’ve built, take care of your people, and ensure a smooth transition into the next chapter.

‍

‍