What I Learned When My Merger Didn't Go According to Plan

"Voting rights give you legal control, but relationships determine whether your merger creates lasting value or lingering resentment. Past investors wanted to renegotiate the terms of the deal, even though they were greatly outnumbered by my voting rights. These were people who had contributed large sums of money when InList needed it most, even if their equity stakes had become relatively small over time. I still did my best to accommodate their wishes where reasonable."

"Understand that misaligned expectations will cost you talent, and legal fees can devour deal value fast. The buyer's operating approach triggered senior staff departures. Legal fees threatened to spiral as negotiations dragged on. What I thought would be straightforward became a masterclass in managing the unexpected. The term sheet you just signed doesn't guarantee smooth sailing, especially when objectives and incentives shift after closing."

"Protect yourself if you're staying on, and get creative with entity structure to solve legacy problems. When mergers don't go according to plan, founders need ways to protect themselves, their team, and their business. That can include planning for how responsibilities and risks are handled during the transition. It can also involve structuring entities to address legacy issues that otherwise create friction and ongoing negotiation."

"Good faith builds goodwill, but stay prepared for the worst and be willing to make compromises. Even when you have controlling voting rights, other stakeholders may still push for renegotiation. Building goodwill can reduce conflict, but preparation for adverse outcomes helps prevent surprises. Compromises may be necessary to keep negotiations from escalating and to preserve value for the company and its people."

Voting rights can provide legal control in a merger, but relationships shape whether the deal produces lasting value or lingering resentment. Misaligned expectations can drive talent losses and increase costs, while legal fees can quickly erode deal value. Protecting the business and the people involved may require staying on through the transition while using creative entity structures to address legacy problems. Good faith can build goodwill, but preparation for adverse outcomes remains necessary, including willingness to make compromises. Even with controlling voting rights, renegotiation pressure from prior investors and operational changes from the buyer can trigger staff departures and prolonged negotiations.

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