M&A Series

The Psychology of Selling a Business

Navigating the Emotional Side of M&A

When people talk about M&A, they usually talk about numbers — EBITDA multiples, term sheets, valuations.

But here’s the truth:
Most deals don’t fall apart because of math. They fall apart because of emotion.

Selling Is Personal—Not Just Financial

For many business owners, the company isn’t just a financial asset. It’s a part of their identity. I’ve seen it firsthand:

• One seller couldn’t bring himself to attend the closing.

• Another had to take a walk halfway through signing.

• Some sellers had brokers. Others were on their own.

These moments, and many more, have shaped my approach to empathy in deal making. Some may say that is naive. Or wrong. However, the returns I've seen through my career far exceed industry expectations and predictions for success in M&A.

Regardless of the structure, the emotional weight is real:
Am I doing the right thing?
What happens to my team?
Is this the legacy I wanted?

My Role as a Strategic Buyer

I’ve spent my career on the buy side of M&A. Not as a private equity investor or banker—but as a strategic buyer or strategic buyer representative. I’m certified in M&A (CMAP) and valuation (NACVA), with experience negotiating, managing, and integrating deals from start to finish. But the most underrated skill? Empathy. Because when a seller doesn’t have an advisor—or has one that’s not helpful — the emotional side of the deal often lands on the buyer’s shoulders.

Empathy Makes Better Deals

As a buyer, I have a duty to my stakeholders to get the best deal possible. But that doesn’t mean being cutthroat. It means being strategic. And part of the strategy is understanding:

• What really matters to the seller?

• What are they worried about?

• How do we create a deal that actually works for both sides?

I’ve learned to listen before negotiating, and to treat emotional concerns with respect—even when they’re not in the spreadsheet.

If It’s Not Synergistic, It’s Not a Win

I don’t believe in “winning” a deal if it isn’t right for both sides. I’ve seen what happens when deals close with tension or mistrust:

• Integration fails.

• Employees leave.

• Value disappears.

As a strategic buyer, I don’t just want to close—I want the deal to work long-term. That means trust, alignment, and a plan that benefits both sides.

For Business Owners Considering a Sale

If you're thinking about selling, here’s the truth: It’s okay to feel unsure. This is more than just a transaction—it’s a transition. The right buyer isn’t just looking at your numbers. They’re looking at your story, your team, your culture. They’ll want to understand what matters to you. They’ll aim to keep what you built alive and thriving.

Final Thought

M&A isn’t just about multiples. It’s about people.

The best deals happen when buyers and sellers step into each other’s shoes — not just to close, but to build something that lasts. Let’s do deals that feel right—not just at signing,
but six months… even six years down the line.

The Hidden Risk in GovCon M&A: When Set-Aside Contracts Limit Your Buyer Pool

Many government contracting businesses rely on set-aside contracts (SDVOSB, 8(a), WOSB, HUBZone). While great for winning work, they can severely limit buyers when selling. If the new owner doesn’t qualify, those contracts can disappear, putting the deal at risk. I’ve seen this scenario play out many times—companies built around their 8(a)-designation scrambling to sell as their status nears expiration. If your business relies solely on its set-aside status rather than its product, capabilities, or value proposition, you may face a lower valuation and a severely limited buyer pool. Here’s how buyers and sellers can navigate this challenge:

1. Assess Set-Aside Risk Early

• Sellers: If 50%+ of revenue comes from set-aside contracts, your buyer pool is limited. I recommend that no one portion of your revenue base is more than 30% of your base, and you spread out the contract set aside types.

• Buyers: Ask for a contract breakdown upfront to avoid surprises. Be sure you are buying for past performance and capability as much as you are for current contracts. And identify a future pipeline.

2. Plan for a Transition Strategy

• Some contracts allow for temporary transition periods, but others don’t.

• Explore mentorships, JVs, or keeping the seller involved during rebid cycles.

3. Structure the Deal to Share Risk

• Use earnouts, seller financing, or escrow to offset lost contracts.

• Tie part of the purchase price to contract retention success.

4. Reduce Set-Aside Dependency Before Selling

• Sellers: Start pursuing unrestricted contracts 1-2 years before selling.

• Buyers: If you don’t qualify, look at partnering with a certified firm.

5. Get GovCon-Specific M&A Advice

• Standard M&A strategies don’t always work in GovCon.

• Work with GovCon attorneys to review novation risks, contract eligibility, and DCAA compliance.

Final Thought:

Ignoring set-aside risks can tank a deal. Buyers must understand contract restrictions, and sellers should prepare early to expand their buyer pool. A well-planned exit ensures higher valuation and a smoother sale.

Quick Tips for Selling a Business

Selling a business isn’t just a transaction; it’s a strategic journey that can transform your hard work into lasting value. Whether you’re considering an M&A exit in the near future or a few years down the road, planning ahead is key to securing the best outcome for you, your employees, and your legacy.

🔑 Here are some key steps to get started:

1️⃣ Valuation - Know your business’s worth and understand what drives its value.

2️⃣ Streamline Operations - Efficiency and profitability attract buyers.

3️⃣ Financial Clean-Up - Accurate records and financial clarity build trust.

4️⃣ Succession Planning - Ensure a smooth transition to retain value.

5️⃣ Engage with Verus Datum at launch - We will help you connect with M&A experts that can navigate complex negotiations for the best terms.

💡 Remember: Exit planning isn’t about leaving, it’s about preparing for your business’s future. Start now to make the process smooth, maximize value, and leave on your terms! #ExitStrategy #BusinessSale #MergerAndAcquisition #MABusiness #BusinessExit #SmallBusinessOwner #EntrepreneurLife #FuturePlanning #BusinessGrowth #MaximizeValue

An Example of Why Many M&A Deals Fail

If you research M&A, you’ll find a common statistic: more than half of deals fail. But what does that really mean? It means they fail to meet expectations.

I believe a big part of the problem is that deals aren’t managed well from the start. Brokers focus on EBITDA multiples. Buyers treat acquisitions as project exercises—a checklist of due diligence tasks with the sole goal of getting to closing. But are we looking deep enough?

Let me share a real-world story of a deal I did NOT close on the buy side.

A $32M Disaster Waiting to Happen

Company A had $40M in revenue, with 80% ($32M) tied to a single NASA contract expiring in 18 months. They had $4M in EBITDA, and the brokers were pushing for an 8x multiple—$32M.

Now, let’s put that into perspective:

• The deal would take about six months to close.

• That would leave the buyer only 12 months of guaranteed revenue.

• If the contract wasn’t renewed, $32M in revenue would drop to $8M overnight.

I made an offer: $6M with an earn-out based on contract renewal. If we won the follow-on, the sellers would get more. The advisor called my offer offensive. My response?

"Without us, your client is out of business in two years."

Who was right? Well, let’s just say that company is no longer in business.

Why M&A Deals Fail

Buying that company for $32M would have been insane. The broker didn’t understand how to properly value the business or educate their client, and as a result, the deal collapsed—not just with us, but with everyone.

This is why so many deals fail.

• Sellers are ill-advised and ill-prepared for the realities of their business value.

• Buyers don’t look beyond the numbers to assess risk and long-term viability.

• Brokers push multiples based on anecdotal conversations and blue-sky forecasting, rather than what actually makes sense.

M&A is More Than Just EBITDA Multiples

If you’re looking to sell or buy a business, avoid advisors who focus only on multiples. Valuation is a piece of the equation—but not the only piece.

Successful deals happen when:
✅ The right expectations are set.
✅ Due diligence is used as an integration tool, not just a checklist.
✅ Long-term relationships are built between buyer and seller.

If the only thing a dealmaker cares about is EBITDA, expectations won’t be met—and the deal will fail.

Final Thought

M&A isn’t just about getting to the closing table—it’s about making the right deal. If sellers don’t properly prepare and buyers don’t look beyond the surface, the numbers won’t matter. The deal will fail—just like Company A.