When to Phone and When to E-mail During M&A Negotiations

As an aid to successfully negotiating an M&A deal, pick up the phone and have a conversation, especially if the subject is delicate. The flip side to “pick up the phone” is “avoid e-mail.” E-mail is a wonderful tool, but it’s a passive form of communication. A single five-minute phone call often resolves issues that otherwise would play out in five or ten (or more) e-mail exchanges.

That’s not to say you shouldn’t use e-mail in M&A negotiations. In fact, e-mail can be an imperative tool because it allows you to memorialize a conversation. The trick is to know when to use e-mail.

For example, in a negotiation where the Buyer wanted the Seller to pay for the cost of mailing catalogs (about $500,000) intended to support a marketing campaign. Those catalogs were to be mailed just before the scheduled closing. Typically in a business sale, Seller pays all expenses prior to close, and Buyer pays all expenses after.

The mediator argued that the Buyer should pay for the catalogs because the resulting sales would benefit him, the new owner, and he finally agreed during an in-person management meeting that this solution was reasonable. The mediator then sent him an e-mail reiterating that discussion.

A few weeks later, on the eve of closing, the Buyer suddenly informed the Seller (rather coldly) that he refused to pay for the catalogs because expenses prior to closing are the responsibility of the Seller. The Seller would’ve otherwise delayed the release of the catalogs for a few days so that the expense would be incurred post-sale.

Whether the Buyer forgot the conversation (and resulting e-mail) or whether he felt he had the Seller over a barrel, but fortunately, the mediator had the e-mail thread that showed he’d very clearly agreed to cover the cost of the catalogs. The Buyer, despite being rather irate, conceded the point and agreed to pay for the catalogs. They closed the deal a few days later.

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