Red Flags in an M&A Offer You Should Never Ignore

Not all offers are created equal.

𝑨 𝒉𝒊𝒈𝒉 𝒏𝒖𝒎𝒃𝒆𝒓 𝒐𝒏 𝒑𝒂𝒑𝒆𝒓 𝒅𝒐𝒆𝒔𝒏’𝒕 𝒂𝒍𝒘𝒂𝒚𝒔 𝒎𝒆𝒂𝒏 𝒊𝒕’𝒔 𝒕𝒉𝒆 𝒓𝒊𝒈𝒉𝒕 𝒅𝒆𝒂𝒍 𝒐𝒓 𝒂 𝒔𝒂𝒇𝒆 𝒐𝒏𝒆.

Here are 7 M&A offer red flags we see far too often in the Marcomms and Martech world 👇

1️⃣ 𝐃𝐞𝐟𝐞𝐫𝐫𝐞𝐝 𝐂𝐨𝐧𝐬𝐢𝐝𝐞𝐫𝐚𝐭𝐢𝐨𝐧 𝐰𝐢𝐭𝐡 𝐍𝐨 𝐂𝐥𝐚𝐫𝐢𝐭𝐲
If considerable value is tied to future “earn-outs” or milestones with no transparency, proceed cautiously.

2️⃣ 𝐄𝐱𝐜𝐞𝐬𝐬𝐢𝐯𝐞 𝐃𝐮𝐞 𝐃𝐢𝐥𝐢𝐠𝐞𝐧𝐜𝐞 𝐑𝐞𝐪𝐮𝐞𝐬𝐭𝐬 𝐏𝐨𝐬𝐭-𝐎𝐟𝐟𝐞𝐫
If due diligence starts after heads of terms but suddenly expands into a fishing expedition, they may be stalling or not serious.
 
3️⃣ “𝐕𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧” 𝐓𝐡𝐚𝐭 𝐈𝐠𝐧𝐨𝐫𝐞𝐬 𝐂𝐨𝐦𝐦𝐞𝐫𝐜𝐢𝐚𝐥 𝐑𝐞𝐚𝐥𝐢𝐭𝐲
Beware inflated offers built on unrealistic multiples of unrepeatable EBITDA or “potential.”
𝑺𝒆𝒏𝒔𝒊𝒃𝒍𝒆 𝒃𝒖𝒚𝒆𝒓𝒔 𝒗𝒂𝒍𝒖𝒆 𝒔𝒖𝒔𝒕𝒂𝒊𝒏𝒂𝒃𝒊𝒍𝒊𝒕𝒚, 𝒏𝒐𝒕 𝒋𝒖𝒔𝒕 𝒔𝒄𝒂𝒍𝒆.
 
4️⃣ 𝐍𝐨 𝐂𝐨𝐦𝐦𝐢𝐭𝐦𝐞𝐧𝐭 𝐭𝐨 𝐘𝐨𝐮𝐫 𝐓𝐞𝐚𝐦 𝐨𝐫 𝐂𝐮𝐥𝐭𝐮𝐫𝐞
Expect turbulence post-deal if there’s zero mention of staff, values, or culture in the buyer’s vision.
𝑷𝒆𝒐𝒑𝒍𝒆 𝒂𝒓𝒆 𝒚𝒐𝒖𝒓 𝒂𝒈𝒆𝒏𝒄𝒚. 𝑩𝒖𝒚𝒆𝒓𝒔 𝒔𝒉𝒐𝒖𝒍𝒅 𝒌𝒏𝒐𝒘 𝒕𝒉𝒂𝒕.

5️⃣ 𝐔𝐧𝐮𝐬𝐮𝐚𝐥 𝐃𝐞𝐚𝐥 𝐒𝐭𝐫𝐮𝐜𝐭𝐮𝐫𝐞𝐬 𝐨𝐫 “𝐂𝐫𝐞𝐚𝐭𝐢𝐯𝐞” 𝐄𝐚𝐫𝐧-𝐎𝐮𝐭𝐬
 Overcomplicated structures often hide risks or mask gaps in funding.
 𝑺𝒊𝒎𝒑𝒍𝒊𝒄𝒊𝒕𝒚 𝒑𝒓𝒐𝒕𝒆𝒄𝒕𝒔 𝒗𝒂𝒍𝒖𝒆. 𝑪𝒐𝒎𝒑𝒍𝒆𝒙𝒊𝒕𝒚 𝒐𝒇𝒕𝒆𝒏 𝒆𝒓𝒐𝒅𝒆𝒔 𝒊𝒕.
 
6️⃣ 𝐏𝐫𝐞𝐬𝐬𝐮𝐫𝐞 𝐭𝐨 𝐒𝐢𝐠𝐧 𝐐𝐮𝐢𝐜𝐤𝐥𝐲
Artificial urgency is a red flag, especially if combined with vague terms.
 
7️⃣ 𝐓𝐡𝐞𝐲 𝐓𝐚𝐥𝐤. 𝐁𝐮𝐭 𝐃𝐨𝐧’𝐭 𝐋𝐢𝐬𝐭𝐞𝐧
If the buyer talks at you, not with you, they likely haven’t grasped your true value.
𝑨 𝒈𝒓𝒆𝒂𝒕 𝒅𝒆𝒂𝒍 𝒔𝒕𝒂𝒓𝒕𝒔 𝒘𝒊𝒕𝒉 𝒂 𝒈𝒓𝒆𝒂𝒕 𝒅𝒊𝒂𝒍𝒐𝒈𝒖𝒆. 

💬 𝐓𝐡𝐢𝐧𝐤𝐢𝐧𝐠 𝐚𝐛𝐨𝐮𝐭 𝐚 𝐬𝐚𝐥𝐞? 𝐆𝐨𝐭 𝐚𝐧 𝐨𝐟𝐟𝐞𝐫 𝐨𝐧 𝐭𝐡𝐞 𝐭𝐚𝐛𝐥𝐞?
 Before you say yes, let’s pressure-test it.
 We’ve seen every structure, every buyer, every trick in the book.