By Giorgio AndonianPublished On: October 28, 2025

Navigating the Tightrope: The Perils and Power of Direct Negotiations in M&A Deals

In the high stakes world of M&A, negotiations are the delicate art of balancing ambition with restraint. A well-orchestrated deal can propel a company into its next growth phase. Yet, as any seasoned dealmaker knows, the path from initial interest to closing is littered with pitfalls ranging from company performance, changing economic factors and struggling to come to terms acceptable to both parties.

Nearly all our clients are seasoned entrepreneurs, having built incredibly successful business on the backs of hard work, risk and hardnosed negotiations, so you can imagine how hard it is for a client to take a step back and let others work on a deal on their behalf. There are cases where parties bypass the advisors to negotiate directly which could put the transaction in jeopardy. While building rapport between buyers and sellers is a cornerstone of a successful transaction, veering too far into dialogue can turn enthusiasm into entanglement.

Drawing from a recent experience, I’d like to highlight the dynamics of advisor led versus direct negotiations; how overzealous early negotiating can jeopardize even the most promising deals and how to safeguard against it.

The value of advisors: Gatekeepers in a complex dance

M&A negotiations aren’t just about numbers; they’re about relationships, foresight, and strategy. Professional advisors (investment bankers, attorneys, and CPAs) serve as the architects of these deals. They bring objectivity, spotting risks that emotional stakeholders might overlook, and they leverage their experience to achieve the best terms without burning bridges.

Contrast this approach with direct negotiations between buyers and sellers. On the surface, going direct builds trust and accelerates momentum in a deal. It humanizes the process, allowing principals to align on vision and culture early and hammer out the ‘business terms’ in an efficient manner. But without the buffer of advisors, conversations can devolve into one-sided advocacy, especially if sellers feel that buyers are trying to take advantage. As one deal recently illustrated, this approach can create a false sense of security that everything is going swimmingly, only to unravel when unforeseen complexities arise.

A case study: When early wins breed later losses

Consider a middle market company in a competitive sector, drawing interest and offers from both strategic acquirers seeking synergies and private equity (PE) firms eyeing it as a platform investment.

The auction process was textbook: Advisors orchestrated a competitive bid environment; refining offers through iterative rounds until a letter of intent (LOI) was signed with a strong PE backed strategic buyer. The chemistry was obvious. Sellers appreciated the buyer’s vision and historical success, and the buyer valued the target’s performance, growth trajectory and management team. As is natural in these cases, direct dialogues between both parties followed, with principals exchanging ideas on integration and post close collaboration.

At first, this chemistry was an advantage, smoothing due diligence and building excitement. But as talks deepened, the sellers pushed aggressively on key terms. Front loaded concessions on price and structure would leave little flexibility for the inevitable curveballs: evolving tax implications, indemnifications, and property and environmental hurdles that surfaced once legal documents circulated. Advisors, initially sidelined to preserve the “good vibes,” were thrust back in amid an ever-complicated transaction. The buyers, feeling squeezed and frustrated from the early ‘losses’, began their own hardball tactics.

The deal teetered on the brink, with threats of walkaways and fractured trust. Ultimately, cooler heads prevailed and the transaction limps forward. The potential of a strained relationship was high and that could haunt post close integration, especially in a PE deal where sellers often retain earn outs or remain on as the management team.

Lessons from the Case Study

Early rapport is valuable, but unchecked direct talks can erode trust. In this deal, initial excitement masked building tensions, leading to a near-collapse. The takeaway? Involve advisors early to channel enthusiasm into structured progress.

This scenario highlights two interconnected risks associated with unrestricted direct negotiations:

Over-negotiating upfront: The flexibility trap

Deals are living documents; not every issue reveals itself in the LOI phase. Supply chain disruptions, intellectual property audits, or shifts in market conditions can demand concessions later. When parties exhaust their bargaining chips early, haggling over every decimal point, they leave no margin for these “known unknowns.” In our example, the sellers’ aggressive stance from the get-go turned a collaborative process into an adversarial one.
The ‘Bad Cop’ Reversal: Advisors as Unsung Heroes

Advisors often absorb resistance, positioning themselves as the “bad cops” to shield their clients from reputational damage. Sellers stay likable, while professionals handle the gritty pushback. When deals shift to direct talks, sellers inherit this role, risking perceptions of stubbornness. Buyers can begin to question if the sellers are the right party to partner with.

Buyers, advised by teams of experts (accountants dissecting financials, earn outs and deal structures, high powered attorneys vetting reps and warranties), can outmaneuver sellers by the sheer volume of their teams. It becomes easy to deflect blame when buyers can simply state that their advisors are pushing certain deal terms. What starts as “just chatting” and getting to know each other quickly becomes a lopsided contest, where leverage quickly disappears.

You want partners at closing, not enemies. Overly aggressive upfront dynamics can poison the well and strain the partnership from the get-go.

Striking the balance: When direct dialogue works and when it doesn’t

Direct engagement isn’t necessarily a bad thing; it’s a tool, not a taboo. It shines in defining non-economic terms: cultural fit, strategic alignment and growth plans. Sellers should absolutely convene with buyers to brainstorm integration roadmaps or address operational synergies; these build the intangible glue that will be used to drive the company into its next iteration.

Treat direct talks as extensions of the advisory process, not alternatives. Establish ground rules upfront.

For example:

No commitments without looping in the team
All economic redlines routed through advisors (attorneys, CPA’s and bankers)

Recognize the team you’re up against. Buyers, particularly PE firms, deploy war rooms of specialists: valuation experts modeling complex financial scenarios, tax advisors optimizing structures, and consultants stress testing all aspects of your business. Sellers must match this firepower with a unified front. Isolated communication fosters misunderstandings. A casual email from the CEO contradicting an attorney’s response can derail momentum.

When to Go Direct vs. Advisor-Led

Go Direct For: Vision sharing, cultural alignment, and high-level integration ideas.
Stick to Advisors For: Price, structure, indemnities, and any binding terms.
Always: Keep communications transparent across your full team.

The M&A team: Your ultimate asset

Ultimately, successful negotiations rely on effective coordination. Advisors are not obstacles; they are powerful allies. Bankers lead the auction and draft the term sheets, attorneys strengthen the defenses, and CPAs ensure financial prudence. Sellers should provide the guiding principles but delegate the detailed work.

Roles in Your M&A Dream Team

Investment Bankers: Orchestrate auctions, refine bids, and maximize value.
Attorneys: Vet contracts, handle reps/warranties, and mitigate legal risks.
CPAs: Scrutinize financials, optimize tax strategies, and validate earn-outs.

As you enter M&A waters, remember: Negotiations reward patience and preparation over boldness. Lean on your advisors to negotiate fiercely while you nurture the relationship. In a landscape of professional dealmakers, the true edge lies not in out haggling alone, but in out collaborating.

It’s important to remember that sellers rarely act intentionally. Instead, it’s a natural part of entrepreneurship, something we often see. There are multiple factors involved, and placing blame on any party isn’t accurate. Instead, it’s more of a learning opportunity for all parties involved: sellers, advisors, attorneys, and buyers.

Giorgio Andonian is a Managing Director at FOCUS with a proven track record of success in orchestrating strategic direction for mergers and acquisitions in the Consumer and Automotive Aftermarket industries. Mr. Andonian joined FOCUS in 2019 to work on sell-side, buy-side, recapitalizations and capital raises for middle market businesses within his respective industries. As a leader, Mr. Andonian has a wide lens of leadership from his 15+ years of operational experience. Prior to joining FOCUS, Mr. Andonian was vice president of a regional tire chain in Southern California overseeing all aspects of the operation, including sales, marketing, finance and human resources growing the business and preparing for an eventual exit to a private equity platform. Before that he worked at another Southern California tire chain, where he held a variety of positions, including finance, business analysis, operations and supply chain management. Mr. Andonian earned a Master of Business Administration, with an emphasis in finance, from Pepperdine University’s Graziadio School of Business and Management. He also has a Bachelor of Science in Business Administration, with an emphasis in finance and supply chain management, from the University of San Diego. He holds several licenses and certifications, including Series 79, Series 82, Series 63, and a California Real Estate License.