Embarking on the journey of selling or merging your private company is a monumental achievement. It places you in an exclusive group of entrepreneurs who have achieved what many others can only dream of. However, despite the excitement of reaching this milestone, the path is undeniably stressful. You’re juggling the emotional and operational demands of running a business while navigating the complexities of a merger or acquisition (M&A).
The good news? With preparation and guidance, you can manage these stressors and keep a clear mind during this pivotal time. After all, the rewards of a successful exit can far outweigh the challenges.
Why M&A Deals Are Emotionally Challenging: A Look at Stress
According to the Holmes and Rahe Stress Scale, life’s most stressful events rank from marriage to losing a loved one to the death of a spouse. When you’re going through an M&A process, you may encounter a range of stressors that can be emotionally overwhelming.
Most Common Stressors and Relative Point Value:
1. Death of a spouse 100
2. Divorce 73
3. Marital Separation 65
4. Jail term 63
5. Death of a close family member 63
6. Personal injury or illness 53
7. Marriage 50
8. Fired at work 47
9. Marital reconciliation 45
10. Retirement 45
11. Change in health of family member 44
12. Pregnancy 40
13. Sex difficulties 39
14. Gain of a new family member 39
15. Business readjustments 39
16. Change in financial state 38
17. Death of a close friend 37
18. Change to different line of work 36
19. Change in number of arguments with spouse 35
20. Mortgage over $ 50,000 31
21. Foreclosure of mortgage 30
22. Change in responsibilities at work 29
23. Son or daughter leaving home 29
24. Trouble with in-laws 29
25. Outstanding personal achievements 28
26. Spouse begins or stops work 26
27. Begin or end school 26
28. Change in living conditions 25
29. Revision of personal habits 24
30. Trouble with boss 23
31. Change in work hours or conditions 20
32. Change in residence 20
33. Change in school 20
34. Change in recreation 19
35. Change in religious activities 19
36. Change in social activities 18
37. Loan less than 50,000 17
38. Change in sleeping habits 16
39. Change in number of family get-togethers 15
40. Change in eating habits 15
41. Single Person Living Alone 14
42. Vacation 13
43. Holidays 12
44. Minor violation of laws 11 (Reps & Warrantee liabilities can be somewhat unquantifiable)
45. Contingent Payment / Earn-out Payments – will I get paid?
As a business owner going through a sale or merger, you may be juggling these life-altering events, combined with the intrinsic stress of leading a company and dealing with the deal’s ups and downs. While most entrepreneurs can manage one or two stressors at once, the weight of handling many at once can be overwhelming—especially without proper management techniques and a support system in place.
How to Manage the Emotional Rollercoaster of an M&A Deal
Successfully navigating an M&A transaction is more than just closing a deal—it’s about maintaining your mental and emotional health along the way. Here are 10 key strategies for managing stress during an M&A transaction:
1. Recognize This Is a Process, Not an Event
It’s easy to get overwhelmed by the idea of “closing the deal.” However, M&A is a marathon, not a sprint. Take it step by step.
2. Leverage Your Advisors
Your advisors, such as your investment banker or legal counsel, are your critical emotional buffer. Their objective insights help you maintain perspective and guide your decision-making throughout the process.
3. Practice Self-Care
Self-soothing techniques like meditation, exercise, or spending time with loved ones can help recharge your emotional battery. Deal fatigue is a very real phenomenon, so prioritize your well-being to stay focused and healthy.
4. Communicate Regularly and Openly
Talk frequently with your team, advisors, and family about the challenges you’re facing. Acknowledging the emotional strain can relieve stress and make the process more manageable.
5. Grant Yourself Grace
As you work through the complexities of the deal, remember: you don’t need to have all the answers right away. Trust the process, and allow things to unfold organically.
6. Take One Decision at a Time
Avoid becoming overwhelmed by the big picture. Tackle one decision at a time and break down the issues into manageable tasks. Avoid rushing toward the closing table. Patience is crucial.
7. Don’t Panic During Setbacks
Remember the old M&A axiom: Every deal dies three times. Don’t panic when setbacks occur. Instead, revisit your emotional strategies from steps 1-6 and trust the process.
8. Maintain Confidence
You’ve built a great business. Recognize that your company is worthy of a sale. The journey may have challenges, but keep your focus on your end goals, knowing that you’re in control.
9. Implement the Positivity Ratio (3:1)
Even in difficult moments, try to maintain a positive outlook. Focus on the positive aspects of your journey and remind yourself of your accomplishments. This “fake it until you make it” attitude can be a game-changer.
10. Reflect on Your “Why”
Step back periodically to reflect on your original goals and motivations. Why did you start your business? What is your dream exit scenario? Reconnecting with these values will help you maintain clarity and focus.
Final Perspective: Entrepreneurs’ Top Regrets and How to Avoid Them
To further refine your perspective and manage stress, consider reflecting on the top five deathbed regrets of entrepreneurs:
- “I wish I hadn’t worked so hard and spent more time with loved ones.”
- “I wish I had stayed in touch with my friends at a deeper level.”
- “I wish I’d let myself be happier.”
- “I wish I’d had the courage to express my true self more.”
- “I wish I’d lived a life truer to my dreams, instead of living up to others’ expectations.”
While pursuing an M&A deal can feel like a high-pressure journey, successful exits can bring about life-changing rewards. The process may involve moments of struggle, but when handled with the right mindset and the proper tools, it can lead to profound personal and financial fulfillment.
Merit Investment Bank’s Role in Reducing M&A Stress
At Merit Investment Bank., we specialize in helping entrepreneurs navigate the complexities of M&A transactions with clarity and ease. Our experienced team of investment bankers provides a supportive framework that minimizes stress, helping you achieve your desired outcomes with as little emotional toll as possible.
Reach out today to discuss how we can guide your company through this transformational journey and help you build long-term wealth and stability through the strategic sale or recapitalization of your business.
Talk to the Experts at Merit Investment Bank!
J. Craig Dickens
Chairman
Craig.Dickens@MeritInvestmentBank.com
253-370-8893
Securities offered through Finalis Securities LLC Member FINRA/SIPC. Merit Investment Bank and Finalis Securities LLC are separate, unaffiliated entities.
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