ABSTRACT
Up to 40% of M&A deals are believed to die during diligence, but there is scant literature examining why – until now. Using original interviews with practitioners, this Article examines what causes buyers of private companies to abandon deals after entering into a nonbinding (but ‘sticky’) preliminary agreement and describes what the lawyer can do about it.
As this research shows, M&A deals rarely die because of ordinary negotiation stalemates or disagreements about valuation. Instead, M&A’s unique characteristics, including its exceptional outcome (with one party extinguished), limit what causes deal failure to circumstances that sour a buyer’s perception of its long-term value from the transaction. It is those circumstances that standard M&A contract mechanisms cannot sufficiently address.
I sort the ‘deal killers’ identified by practitioners into three categories: those that will torpedo any deal, those that will cause a subset of buyers to walk away (depending on their underlying motivation) and those that are highly buyer-specific. This taxonomy provides critical insights into deal efficiency, including by showing when sellers ought to accept a renegotiated term sheet (versus letting the deal die), which party bears the burden of surfacing the deal killer as early as possible, and the attorney’s role in all of it.
Landy, Rachel, Deal Killers (September 2, 2026), Cardozo Legal Studies Research Paper No 2026-20.
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