There are common yet crucial mistakes that sellers can make that can have a significant influence on deals. One issue Mad River Associates Partner Andy Horne sees isn't so much a specific error as much as it is an incorrect assumption. He says a problem that can come up with buyers and sellers who have done one or very few transactions and those who have bought and sold multiple companies is the two sides often speak a different language. Further, the seller or buyer may not recognize just how different that language is because it can sound identical to terms they use that have a different name. KPI, he says, is one example.

"Virtually all buyers talk about KPI," he says. "One of the key things of due diligence is identifying KPI and then reviewing KPI — that's key performance indicators. But the notion is most sellers, especially family owned and founder-owned, never use the term KPI. They know what they've looked for all these years, they know what they think is important, but they've never labeled it as such."

One way to avoid this miscommunication is to appoint someone as a translation officer in the deal. This person is responsible for learning what it is that the sellers do under whatever names they do it and then recognizing that that terminology needs to be changed toward what the buyer is looking for.

Market is also another term with a definition that can differ between the parties. For example, a buyer might ask for a report of how successful a company is in each market. But it's important to ask what constitutes a market because the market may not be the same in the seller's eyes. Industry is another term that can differ depending on who uses it, one that can also overlap with what some call a market. Being sure each side knows what the differences are can help avoid a whole host of miscommunication.

Eliassen Group CEO David MacKeen says while everyone is selling and trying to get a transaction closed, there should be direct conversations as far as what does day one look like in terms of brand reporting structure and expectation of synergies.

"It's never one size fits all," he says.

On one deal the company undertook years ago, they found a message on social media that the owner posted on the day of the close about how the company would operate once the two companies were joined. However, the owner's statement was not in line with what MacKeen had anticipated. After the transaction, it turned out that the cultural alignment wasn't there. It took several years to move the owner out and there was a lot of turnover.

"It was a significant distraction to the business for a number of years," he says. "Fortunately from that point on we've not replicated that. We make sure there's a lot of clarity on what that day one looks like so that there are no surprises."

WJ Connell CEO John Stephenson says when he looks at legal documentation, one thing they like are the pages and pages of definitions.

"Before you start pouring into legal documentation, what are the definitions? What are we really talking about? Because you want to make sure that everybody's on the same page about what are we defining as X and do we agree on what that is? That can be an arduous process but it's so well worth it because it streamlines communication and people end up at least trying to talk about the same thing from the same perspective."

EBITDA, he says, is a term that really needs to be defined early on. It can mean so many different things to so many different people, he says. So, when you're looking at businesses and cash flow, are you really looking at cash flow? How does the company drive earnings? Really delving into that clearly — what's going to be included, what's not going to be included and why — is so well worth the effort because there's often lots of disparity between buyers and sellers in that term.

"Ultimately, if you're doing a deal on a multiple of EBITDA, it can have a huge impact on valuation," he says. "If you don't get definitions right there early on, it can be really problematic."

Horne, MacKeen, Stephenson and CMBG3 Law's John Gardella spoke at the Boston Smart Business Dealmakers Conference about how to effectively prepare yourself and your company to get deals done. Hit play to catch the full panel discussion.