Address Hard Issues Early; Transparency is Critical

In every transaction, critical issues arise beyond merely agreeing on the price. Although delaying tough conversations may seem convenient in the short term, it often results in frustration, loss of trust, wasted time, missed opportunities, terminated deals and costs.

Successful dealmakers understand that obstacles are an inherent part of any deal, whether anticipated or unforeseen. Skilled buyers know what to ask for, and skilled sellers ensure that all key issues are disclosed upfront—no surprises.

Some participants, however, attempt to postpone difficult discussions until the final stages, relying on momentum to ease the process and assure a resolution. These issues can range from dissatisfaction with the agreed price, roles and salaries for key staff, relationships with major customers, leases and landlord approval, bank approvals, and past or current legal actions.

Addressing these issues early in the negotiation process provides several advantages:

• Deal fatigue has not yet set in, relationships remain open and accommodating, parties are still fresh and keen and “benefit of the doubt” prevails,
• Re-negotiation of items that one side may already view as resolved reduces trust and may lead to re-negotiating other items resulting in a tense or uncooperative closing or even deals collapsing. As the deal progresses, petty items can become significant issues and a source of unwarranted discontent and major disagreement.
• Not voluntarily revealing issues and addressing them only when found in detailed due diligence further reduces trust (what other issues have not been discussed/disclosed?). Carrying the burden of not disclosing key items can also lead to significant uncertainty and a source of additional deal related anxiety.

Advantages of addressing these issues upfront include:

• Identifying deal breakers early: Tackling difficult topics upfront helps distinguish between insurmountable barriers and solvable challenges, saving valuable time and resources. Surprisingly, even major concerns are often not deal breakers when addressed openly.
• Building trust through transparency: Honest disclosure of tough issues fosters trust among parties, laying the groundwork for constructive and cooperative negotiations.
• Reducing anxiety and uncertainty: Bringing critical obstacles to light early eliminates prolonged uncertainty and prevents “issue anxiety” from overshadowing the process.

Delaying these conversations can lead to wasted efforts, financial setbacks, and eroded trust. By confronting challenges head-on, negotiators ensure trusting smoother transactions, they quickly filter out deals that do not meet investment criteria, strategic intent or are not viable.