“Time is the great killer of deals.”

So says the professor of dealmaking — Kenneth M. Haffey, the partner in charge of Skoda Minotti’s advisory services group and an adjunct professor at the Weatherhead School of Management at Case Western Reserve University.

“The longer it takes, the more of a chance that the transaction will never take place,” Haffey says.

Haffey has seen it all in his business consulting work over the past 30 years, while his time at Weatherhead has furthered his expertise in helping both sides reach an amicable outcome in their dealmaking activity.

Smart Business Dealmakers spoke with Haffey about how to keep the negotiating process moving forward and a valuable lesson he learned after driving six hours in a snowstorm to close a deal. What follows is a transcript of the above video, edited for readability.

In case you missed it: Valuable perspective from Greg Skoda, one of Cleveland’s most prolific dealmakers

Don’t hold anything back

Sometimes there are things in the closet that aren’t brought out and irrespective of the diligence that anybody does on a company, sellers will sometimes tell you what they think you should hear as opposed to what you need to know. We’ve been surprised different times when not long after the acquisition, something will come up. When we ask the seller, ‘Why didn’t this come up beforehand?’ He or she would say, ‘Well, I was afraid that would squelch the deal.’ Then you almost have to retrade things, not start from scratch, but you have to go back to what’s fair for the buyer, who now has a situation he or she didn’t expect, and how could the seller be made whole?

That’s happened a few times where — back to the psychology side of things — you want to keep people engaged. You don’t want things thrown at each other — figuratively speaking. But you want to make sure it’s a lot of time, effort and energy that’s taken by everybody to get to this point. Where can we go from here? That really goes back to communication. Being open and honest.

Time is often a deal-killer

Time is the great killer of deals. The longer it takes, the more of a chance that the transaction will never take place. After a while, you get kind of deal tired and there are other terms you can give to that. But there are situations where people will reach a certain plateau and an individual will realize he or she is not going to be in charge on a go-forward basis. He or she is going to have make some tough decisions after and come to terms that after the business is sold, he or she won’t be calling the shots, nor will the people he’s relied on. They may not be there going forward.

There is a whole change to the dynamics of the family unit that for many businesses, is going to change things dramatically. Once some business owners who are thinking of selling can’t go beyond that, they don’t want to address it. They don’t want to let the people down that they’ve been employing and they will stop it there. It’s an issue of not having control of who is going to do what when and who is going to even be employed. Not so much surprises in terms of the product offered or the services offered. Those generally get a pretty good run through in the due diligence process. It’s more the fringe things that people don’t expect to happen. Dealmakers would try to address that very early on. But it’s not until people get there that they realize that.

Sometimes, the advisers are not the right advisers — the accounting advisers or the legal advisers. They are not equipped or are not experienced to deal with everything. A hole occurs and a situation that is really tough to deal with. If the advisers aren’t equipped to deal with those, that could really squelch a deal also.

When to ride out the storm

A number of years ago, I drove six hours up to central Michigan in a snowstorm that was death-defying. We get to the meeting, the business owner was ready to sell. I’m representing the buyer and things are going along. Not to pick on any particular profession, but the young attorney had never been through this. As we start down the path of discussion, probably one paragraph into the discussion, this young guy throws his pad on the table. He says, ‘That’s a deal-breaker, we’re not going to go there.’ He gets up and walks out of the room.

It surprised the person he was advising as much as it surprised me. We had a redo, we started it again, we were discussing for 10 or 15 minutes other facets of the transaction. This person did it again. I had never had that before. Now I’ve had it twice in a half an hour. I thought I don’t want to get on the road again for another six hours of driving through a snowstorm. I’m going to find a Holiday Inn before I drive back down to Cleveland. With that going, we settled it down. We came back in and a third time about 15 to 20 minutes after that, this person started into that until the guy who hired him basically grabbed him, sat him down and said, ‘Don’t do it again. We’re going to get this transaction done.’

That was an interesting lesson in reading somebody and letting him go down a path that he was going to go down. I was hoping it would end up like that. Otherwise, I would have gone off and driven back to Cleveland and that would have been that for the situation and the transaction. But it’s reading people and understanding where they’re coming from. He was trying to show his client how much he knew about things and how he, not the client, had to be in control of everything. It’s not a control game. It’s everybody working together.