How to Disclose Bad News in an M&A Deal and Still Maintain a Power Position

By Bill Snow

At some point or another in an M&A deal, you may find that you need to give the other party a piece of information that gives that party more power over you. These suggestions can help you control all that you can.

  • Don’t lie. It’s an old adage, but it’s true: Honesty is the best policy.

  • Deliver the news in a matter-of-fact manner. Although being honest is vital, how you present your information is also key. If you have bad news to share, don’t editorialize or tell a long, drawn-out story. Simply say what you have to say as neutrally as possible.

    You may be surprised by the other side’s reaction. An issue you think is problematic may turn out to be no big deal for the other party.

    However, if you phrase the news in the form of a negative editorial, you may transfer that negative vibe and thus turn a nonissue into a weapon your opponent may use against you. Never make your opponent’s argument.

  • Disclose everything early. If you have a disclosure to make, do it sooner rather than later. And if you think you can hide negative or bad news, remember that those kinds of skeletons usually come to light during due diligence.