The emotional side of M&A: a spreadsheet alone doesn't sign contracts

Jacob Orosz, in The Art of the Exit, wrote that a seller's emotional needs can be as important as financial ones.

I strongly agree. And I'll add: in over 20 years of conducting M&A operations, I've seen perfect spreadsheets swallowed by imperfect feelings. The contract might be flawless, the valuation aligned, the SPA impeccable. Even so, at the moment of the closing, just a silence from the founder is enough for everything to stall.

Those who view M&A from the outside tend to imagine that everything is resolved with valuation, contracts, and money in the bank. It would be great if that were the case. But for a founder, selling a company can mean ending a life phase, losing control, changing identity, and distancing themselves from people they've worked with for decades.

Spreadsheets don't capture that.

The founder doesn't just sell an asset

A striking and personal case that deeply affected me was a client's refusal to sign the SPA, after all his conditions had been accepted by the buyer. On the day of the signing, he sat down at the table and started to cry, saying that his father had sold his farm at 65 and that he – the father – never found joy again. The client had just turned 65 himself at the time. In his mind, history could repeat itself: if his father became unhappy after selling his long-held farm, why wouldn't he suffer the same fate when selling his company, built over decades?

This was an extreme case, but it's a recurring fact for sellers to get cold feet as the signing date approaches. From there, it's a short leap for them to start inventing new demands: I've had clients who, fearing what would happen to their employees, requested a clause to prevent layoffs. I've seen people try to reopen topics agreed upon three months prior, with just fifteen minutes left before the closing.

It seems like irrationality. Perhaps it's just humanity. Or a bit of both.

Often, a company represents legacy, history, ego, family, routine, and reputation. When all of that is on the table, there's no point pretending the decision is purely financial.

It's worth recalling the gesture of Jan Koum, WhatsApp co-founder. When he sold the company to Facebook for $19 billion in 2014, he insisted on signing the contract in front of the old social services building in Mountain View. The same place where, as a child, his mother used to pick up food stamps. The price was on the spreadsheet. The meaning was on the sidewalk.

This kind of thing doesn't appear in the Info Memo. But it does come up in negotiations.

Read more: Opportunity cost in M&A: selling also means letting go.

The advisor's role

For those with experience, it's relatively easy to spot when an owner is emotionally overwhelmed. The challenge is to say it the right way, at the right time, without seeming intrusive.

Sometimes it helps to recall the initial motivation: retirement, lack of succession, asset protection, risk diversification, more family time, or the desire to start a new chapter. Each of these reasons carries a different weight when the founder looks at the contract.

It also helps to show that the negotiation was well-managed, that the contracts protect key points, and that the company will continue to exist. Clauses for earn-out, non-compete, key personnel retention, and post-closing are not just technical constraints. They are tools to alleviate the fear of those exiting the stage.

A good M&A advisor balances three different timelines: the buyer's, who wants speed; the seller's, who needs time to process; and the market's, which doesn't wait. Those who only focus on numbers leave money on the table. Those who only focus on psychology lose the deal.

When emotion becomes a contractual clause

Perhaps the most famous deal in this regard is the sale of Pixar to Disney in 2006 for $7.4 billion in stock. Steve Jobs, then Pixar's largest shareholder, knew the financial side was solid. The risk was different: Disney swallowing the creative culture he had helped build.

The solution came in the form of a contract. Pixar would keep its campus in Emeryville. It would retain its benefits, its schedule, its visual identity. John Lasseter and Ed Catmull would lead not only Pixar but also Disney's own animation division. The attention to the intangible was so significant that it was included in the SPA.

The result: the integration didn't destroy what made Pixar valuable. It was a technically well-executed M&A because it was emotionally well-designed.

This is no coincidence. Studies by Bain & Company and the Boston Consulting Group have shown for years that a significant portion of value-destroying operations fail not due to valuation errors, but due to cultural and human integration failures. In other words: the problem is rarely about the price. It's about the people.

Emotion also affects price

The emotional aspect isn't just a human matter. It has economic consequences.

An insecure seller can delay decisions, reopen closed points, convey doubt to the buyer, or accept poor terms due to fatigue. An insensitive buyer can miss a good opportunity by treating the founder as if they were selling a used machine. In both cases, this turns into a discount, it turns into earn-out a more aggressive earn-out, it turns into a clause more favorable to the other side.

In family businesses, especially, respect for the established history can be part of the negotiation. The Hering-Soma case, announced in 2021 for approximately R$ 5.1 billion, illustrates this well. Hering was founded in 1880, in Blumenau. When Grupo Soma acquired it, they weren't just buying a knitwear company: they were inheriting 140 years of family history. The public discourse surrounding the deal addressed this carefully, and not by chance. In family transactions, due diligence goes far beyond accounting — it involves respecting the narrative.

In Natura's acquisition of Avon in 2019, a similar approach was taken. The buyer's narrative was entirely built around purpose, sustainability, and culture. Cultural shock did exist, and always does. But the way the buyer communicated its values helped unlock a deal fraught with symbolic tensions on both sides.

Read more: M&A Transparency: Hiding problems often proves costly.

How to reduce emotional noise without dehumanizing the process

Some practices help keep the process on track:

• Clearly define, even in the LOI, the timeline and critical milestones of the operation.
• Treat due diligence as a diagnosis, not a moral judgment.
• Anticipate difficult conversations about the team, governance, and the founder's role post-closing.
• Ensure NDA and appropriate information flows, so that confidentiality protects the internal environment.
• Set aside time for the founder to symbolically "say goodbye" to the business. Thoughtful communication to the team is often more valuable than it seems.

Ultimately, it all comes down to a simple idea: the M&A process cannot treat the seller as an obstacle. It must treat them as part of the solution.

The deal closes. The founder moves on.

There's no amount of money that can buy the feeling of a job well done. That's why a good M&A transaction also needs to make sense after the money hits the account.

As Peter Drucker said, "Culture eats strategy for breakfast." In M&A, it can also eat the valuation, the earn-out and the best spreadsheet in the office.

At Biz Invest, we constantly keep this in mind. M&A involves technique, contracts, and negotiation. But it's also a life transition.

Good deals require a cool head. They don't work if you ignore the passion of the people who built the company.