After twenty-five acquisitions across our careers, the thing that still surprises most buyers is how rarely price determines the outcome when two credible offers are on the table.
This isn't sentiment. It's the consistent pattern across deals we've been part of — on both sides. When the multiple gap between two serious bids is within a reasonable range, founders aren't making a financial calculation. They're making a judgment about people. Specifically, they're asking themselves which acquirer they trust to look after what they've built.
The gap between what buyers assume founders want and what founders actually want is where more deal value is destroyed than anywhere else in M&A. Research from Bain & Company indicates that more than half of acquisitions fail to create the value buyers anticipated — and the failure points are almost never financial in origin. They trace back to relationship quality, integration decisions, and what happened to the people the acquirer needed most.
Understanding what founders are actually evaluating isn't a soft skill. It's the thing that separates acquirers who win competitive processes from those who lose to lower offers and can't understand why.
Price is rarely the reason a founder chooses one buyer over another
There's a version of this conversation that most acquirers believe. Founders are rational economic actors. They sell to the highest bidder. Price clears the market.
It's a reasonable theory. It's just wrong in practice.
When a founder has two serious offers within 10–15% of each other — which is more common than buyers think in a properly run competitive process — the multiple rarely determines the outcome. What determines it is the quality of the relationship that has been built throughout the process, and the credibility of the story the acquirer tells about what the business will look like on the other side of completion.
we've watched acquirers lose deals they had every right to win because they treated the commercial process as the entire process. They had the stronger financial case. Their integration track record was demonstrable. But they failed to understand what the founder was actually weighing up.
The founder wasn't asking "which offer maximises our proceeds?" They were asking "who do we trust to look after the people we've spent fifteen years working alongside?" Those are not the same question. And the buyers who figure that out — before the process starts, not during it — consistently win competitive situations.
The due diligence period builds or destroys the relationship — often before the founder knows it
Due diligence is forensic by design. That's appropriate — it's a necessary part of protecting the buyer's position and understanding what's being acquired. The problem isn't the forensic nature of the work. It's when forensic becomes the only register.
The shift in tone that typically occurs between signing heads of terms and exchanging final documents is one of the most consistently underestimated risk factors in a deal process. The early conversations — initial meetings, management presentations, the early relationship-building — are characterised by energy and mutual interest. The diligence phase is characterised by information requests, legal commentary, and sometimes extended periods of silence from the buyer's side.
The founder, who in most cases has never been through a formal sale process before, is left to interpret what that silence means. And the interpretations are almost never charitable.
The acquirers who manage diligence well don't change the substance of what they're doing. They change the communication around it — and that changes everything about how the founder experiences the process.
They're transparent about what they're looking for and why. They communicate proactively when timelines shift rather than leaving the seller to chase. They bring the same decision-makers to the table throughout — not a deal team that wins the work and hands it to a different group for execution. These aren't gestures of goodwill. They're signals about how the acquirer will behave post-completion, and founders read them as exactly that.
According to research on post-acquisition performance, integration outcomes in knowledge-based and professional services businesses correlate strongly with the quality of the relationship established during the transaction process — specifically the degree of trust formed before completion. The businesses that perform best post-close are almost always those where the key people on both sides had developed genuine mutual respect before the deal was done.
Earn-out structures reveal intent more clearly than they manage risk
Earn-outs have become a standard feature of UK mid-market transactions, particularly for founder-led businesses where a meaningful portion of value depends on continued involvement or near-term growth.
In principle, they're a fair way to bridge a valuation gap. In practice, they're frequently the structure that generates the most post-completion disputes and the most damaged relationships.
The problem isn't the concept. It's that earn-outs are often designed primarily to protect the acquirer's downside rather than to genuinely share the upside with the founder. When performance metrics are defined in ways that aren't fully within the founder's control. When the acquirer makes decisions post-completion — staffing changes, overhead allocations, pricing decisions — that materially affect performance against earn-out targets without triggering any adjustment mechanism. When the reporting structure creates inherent conflict between the integration plan and the conditions the founder needs to meet.
Earn-out disputes are an increasing feature of UK commercial litigation, and the pattern in most of them is recognisable: the acquirer believed the structure was fair, and the founder believed it was designed to be unachievable. Both parties are usually partly right.
The earn-out structures that work are the ones where both parties can explain, in plain language, why the arrangement is fair. If either side struggles to do that, the structure needs rethinking before it's signed.
The best earn-outs we've seen are ones designed collaboratively — where the founder has genuine visibility and control over the metrics that matter, and where the acquirer's post-completion decisions aren't in direct tension with what was agreed. That bar is simpler than most legal teams make it sound.
What founders are watching that most buyers never realise
By the time a founder is comparing two serious offers, they've already formed a detailed view of each acquirer's character. Not their track record on paper — their actual behaviour throughout the process.
How they treated the management team during site visits. Whether they remembered context from conversations three months earlier. How they responded when a difficult disclosure was made — whether they engaged with it constructively or used it as leverage. Whether the people who turned up at the management presentation were genuinely the people who would be running the relationship after completion.
Founders pay particularly close attention to how acquirers behave when something goes slightly wrong during the process, because something always does. A disclosure that complicates the picture. A data request that surfaces an uncomfortable number. A valuation adjustment that arrives later than it should. How a buyer handles those moments tells a founder more about what life will look like post-completion than any amount of due diligence protocol.
The acquirers who consistently win competitive processes are the ones who've internalised this. They invest in the relationship before they need it — not as a tactic, but because they understand that what they're actually doing is signalling how they'll behave as owners. And founders, faced with the most significant professional decision of their lives, read those signals very carefully indeed.
Preparing for a process where the founder is genuinely central
The practical implication of all of this is that acquirers who want to win competitive processes with founder-led businesses need to start preparation earlier and differently than most do. The questions to ask before a process begins aren't just "what's the right price?" and "what's the integration plan?" They're "what does this founder actually care about?" and "how do we demonstrate, throughout the process, that we understand and respect it?"
That preparation requires genuine curiosity about the business — not as a tick-box exercise, but because the acquirer actually wants to understand how it works and why it has succeeded. It requires honesty about the integration approach, including the parts that will be challenging. And it requires a consistent team and a consistent message from first meeting to completion.
None of this is complicated. But it's consistently underdone. Which is exactly why the acquirers who do it well have such a consistent advantage.
At Eranos, we work with founders who are considering their options and acquirers who want to approach founder-led transactions with the kind of rigour that produces good outcomes on both sides. If you're thinking about a sale process — or about how you run them — we're worth a conversation.
Published by Eranos ·