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Tired of Deal Fatigue? (Part 1)

Have you ever really thought about deal fatigue? Most people don’t realize that it’s a thing. Yet its real, it’s powerful, and it can drive a deal team to unwittingly act against its own interests at the worst possible times.

And we come across it all the time.

The sad thing about deal fatigue is that it takes what should be an interesting, rewarding, career-enhancing (and, dare we say, fun) experience for the members of the deal team and turns it into soul-crushing drudgery. And it is mostly avoidable.

In our practice, we tend to work on many deals that are impactful. Some are highly impactful on the businesses doing them, some are impactful in the industry, and many fit both categories. In other words, if you do deals for a living, that is what you wake up in the morning to do. And that is as true for the deal teams we work with as it is for us. Yet it’s not unusual to be engaged to help a deal team that has been working on a deal for a significant period of time and is just hating it. What should have been a great experience has turned into work with a capital W. Sometimes the parties are at the contract stage and are failing to close, sometimes they have been working at the sales stage for a very long time and just can’t drive it home, and sometimes they have different parts of the deal languishing at different stages. No matter the circumstances, these situations typically have a few related attributes in common:

  • The form of the deal has gotten ahead of the substance of the deal.

  • There is some sort of breakdown in communication.

  • There is tremendous deal fatigue.

Often, when these three attributes are present, the parties are at a point where they are about to commit one of the two deadly deal sins: (1) they will do any deal, even a bad deal, just to get it done; or (2) they want to scrap what would have been a great deal because they have simply lost the will to continue. Either of these results can have a significant negative impact for obvious reasons, and it’s not necessarily safer to just scrap the deal, particularly if the client had strong business reasons for undertaking the program in the first place.

So, with a fresh perspective, one of the first things to do when getting involved in a deal that has been languishing is to assess to what extent deal fatigue has set in and how badly it is impacting decisions. Here are some signs to look for:

  • Problem solving has given way to positioning.

  • Deal discipline has become sloppy.

  • Messaging has given way to raw data sharing without good context.

  • Team members are complaining profusely that their “day jobs” are being neglected.

  • You get the impression that the team members feel “beat up.” This could be at the hands of the other side, management, or even other members of the team.

  • When you’re in meetings, everyone is really pleasant when talking about the NFL’s catch rule or the impending weather but a gray cloud or sense of nastiness comes over the room when you get down to talking about the deal. In extreme cases, you can actually pick up changes in speech patterns.

  • The team spends a lot of time negotiating against itself.

  • The team makes too many lawyer jokes. (Okay, maybe that’s not deal fatigue, but we’ve heard them all!)

  • There is an irrational and unhealthy dislike of the other side.

If you recognize these attributes, your team may be suffering from deal fatigue. In Part 2 of this series, we’ll discuss some actions you can take if deal fatigue happens to you.

Copyright © 2018 by Morgan, Lewis & Bockius LLP. All Rights Reserved.


About this Author

Edward J. Hansen, Morgan Lewis, Client Technology Transactions lawyer, Business Changes Attorney

Edward J. Hansen brings more than 20 years of experience representing clients in technology transactions that involve significant business change. From the early stages of deals, Ed works closely with clients and their advisers on whole deal advice, often before a request for proposal is sent, and continues his support throughout the engagement’s life cycle.

A. Benjamin Klaber, Morgan Lewis Law Firm, Finance Attorney

A. Benjamin Klaber is an associate in Morgan Lewis’s Business and Finance Practice. The lawyers in our Business and Finance Practice focus on mergers and acquisitions (including joint ventures, spin-offs, and strategic alliances), finance and restructuring, securities (including public and private equity and debt offerings), and tax. Clients range from Fortune 500 companies to investment banks to emerging market companies.