What I learned when my merger didn’t go as planned

As M&A activity increases in 2025, with projections showing US M&A volume reaching $2.3 trillion this year, founders across all industries are exploring exit strategies. But here’s a reality check — research analyzing 40,000 mergers over 40 years found that 70-75% of M&A transactions fall short of their stated goals, according to The M&A Failure Trap by NYU Professor Baruch Lev and University at Buffalo Professor Feng Gu. The term sheet you just signed does not guarantee smooth sailing.

I recently did my own end-to-end merger at InList, where I founded the company and served as CEO. Past investors wanted to renegotiate terms despite my controlling voting rights. The buyer’s operational approach triggered the departure of senior employees. Legal fees threatened to spiral as the negotiations dragged on. What I thought would be simple turned out to be a master class in handling the unexpected.

Here’s what I’ve learned about protecting myself, my team, and my business when mergers don’t go as planned.

1. Voting rights are important on paper; relationships are important in reality

The previous investors wanted to renegotiate the terms of the deal, even though they were significantly outnumbered by my voting rights. These were the people who contributed large sums of money when InList needed it most, even though their shareholdings were relatively small over time.

I still tried to accommodate their wishes where reasonable. The lesson here is that voting rights give you legal control, but relationships determine whether your merger creates lasting value or lasting resentment. Even if you have the upper hand, past investors who have written significant checks deserve consideration.

I chose to work with them not because I had to, but because burning bridges rarely serves long-term interests—especially in tight-knit industries where word of mouth spreads quickly.

2. Wrong expectations will cost you talent

The buyer was not easy to deal with. Things I thought we understood turned out to be completely different. His approach caused senior staff to leave. The buyer’s vastly different business model—moving InList from making money on individual bookings to a system based on membership fees—created immediate friction with team members who had built their careers on a transactional model.

Key takeaway: Your team owes the new buyer nothing. They owe you, the founder who hired them, honest feedback. Create space for these conversations early, before decisions are final. Had I better anticipated the culture clash, I could have negotiated transition protection for key team members or at least prepared them for what was to come.

3. Legal fees can quickly eat up the value of a deal

Legal fees can easily get out of hand in a situation like this, with a lot of back and forth. Kroger’s experience is instructive: In 2024 alone, the company spent $684 million on merger-related costs. While our transaction was significantly smaller, we faced similar cost pressures as negotiations dragged on and issues multiplied.

The broader principle is to establish clear fee structures upfront and recognize when you are paying lawyers to negotiate points that do not materially affect the outcome of the deal. Every additional round of redline costs money. Sometimes the best negotiation tactic is knowing when to let the other side win a minor point to keep the deal moving.

4. Protect yourself if you stay on

My role continues after the merger, although I will then be a minority shareholder. This is where many founders make critical mistakes. You have to protect yourself from making guarantees if you stay on for a transitional period or as a consultant.

If you’re signing personal guarantees, agreeing to earnings tied to metrics you can’t fully control, or taking on operational responsibilities without clear boundaries, you’re putting yourself at significant risk of decline with limited growth.

Get everything in writing. Document your scope of authority, compensation structure, exit triggers and limitations of liability. You will thank those present in the future.

5. Get creative with entity structure to solve legacy problems

One of the most valuable solutions I’ve implemented came from solving a common founder headache: legacy equity promises. My former partner promised “some” equity in InList to various contributors. He left me with the mess to clean up.

Rather than bringing new partners directly into an existing InList Inc. entity. – which would require dealing with all these equity obligations – I created a new entity. New Partners and InList Inc. became partners in this new structure and we transferred all assets of InList to it. No one gets stuck with any equity changes in InList Inc.

This creative restructuring saved us months of negotiations and potential disputes with small shareholders. If you’re sitting on a dirty desk with caps from years of small capital grants, consider whether a similar structural solution might work in your situation.

6. Good faith builds goodwill, but be prepared for the worst and be willing to compromise

During this process, the buyer demonstrated good faith at important moments. The buyer began paying certain expenses before the official agreement was signed, which helped build trust and demonstrated commitment. However, I also remained prepared to pursue other options if it didn’t work out – confidence doesn’t mean naivety.

I also ended up “falling” on some terms of the deal that I personally felt were fair and required to enforce it. Be prepared that you won’t get everything on your wish list. The key for me was to do what was right for the shareholders of my business. Whatever the best deal for InList might be, it was the deal I would try to push through.

The buyer, Christian Jagodzinski of Villazzo, 007 Percent and Desdemona Capital, brought relevant experience from his successful exit from Germany. Its elite social network, 007 Percent, created natural synergies with InList’s access to exclusive venues and events. This strategic alignment made operational friction more manageable because we shared a common vision of where the combined business could go.

Build legal protections, maintain relationships even when you have influence, communicate honestly with your team, be creative about structural solutions, and be prepared to renegotiate the final terms. The initial term sheet is just the beginning.

As M&A activity increases in 2025, with projections showing US M&A volume reaching $2.3 trillion this year, founders across all industries are exploring exit strategies. But here’s a reality check — research analyzing 40,000 mergers over 40 years found that 70-75% of M&A transactions fall short of their stated goals, according to The M&A Failure Trap by NYU Professor Baruch Lev and University at Buffalo Professor Feng Gu. The term sheet you just signed does not guarantee smooth sailing.

I recently did my own end-to-end merger at InList, where I founded the company and served as CEO. Past investors wanted to renegotiate terms despite my controlling voting rights. The buyer’s operational approach triggered the departure of senior employees. Legal fees threatened to spiral as the negotiations dragged on. What I thought would be simple turned out to be a master class in handling the unexpected.

Here’s what I’ve learned about protecting myself, my team, and my business when mergers don’t go as planned.