Practical insights on preventing a lack of preparation from decreasing value or derailing a deal.
Introduction
Over more than two decades advising entrepreneurs on mergers and acquisitions, I’ve learned that selling a company is not just a financial decision. It is, above all, a journey of personal, asset, and emotional transformation. Each transaction carries the history of those who built the business, the marks of the decisions that shaped it, and inevitably, the lessons learned by those who dared to put it to the market test.
In M&A, a company’s value lies not only in financial models but also in how it is presented, structured, and conducted throughout the sales process. The seven mistakes compiled in this paper are not theoretical concepts; they are lessons drawn from repeated real-world negotiations across different sectors and sizes. They are subtle traps that go unnoticed until it’s too late.
Our purpose with this material is to share, in an objective way, practical lessons that help entrepreneurs understand the complexity of an M&A process and recognize the importance of a technical, independent, and strategic approach. In the end, selling a company is not just about closing a cycle, but also about ensuring that the legacy built over a lifetime is transformed into value for the future.
We hope this paper contributes to more informed decisions. Happy reading.
João Eliezer C. Guimarães
Founder & Managing Partner — Camaya Partners
The Seven Most Serious Mistakes in Selling a Company
Selling a company is one of the most significant decisions an entrepreneur faces. Although it may seem like a one-off event, it is a complex process that requires preparation, method, and discipline. In M&A (Mergers & Acquisitions) transactions, every decision, every omission, and every detail, from how the numbers are presented to the communication strategy with buyers can substantially change the outcome.
This paper was developed to condense, clearly and practically, the most common mistakes entrepreneurs make when selling their companies. More than pointing out flaws, it offers a strategic reading of the M&A process, highlighting points that, when well managed, preserve value, avoid setbacks, and increase the likelihood of a successful closing.
This is not a technical manual, but a guide for reflection and business maturity. Each mistake described here stems from the practical experience of someone who has lived through negotiations firsthand, and each one brings the same lesson: In M&A, what seems irrelevant at the beginning is what will define your legacy.
Below, we have compiled the seven mistakes that most compromise the value in a sale and that, when understood, profoundly transform the way the entrepreneur prepares for this journey.
1
Negotiating without conducting a thorough self-assessment
Before starting the process of selling your company, you should put yourself in the investor’s shoes and conduct a thorough self-assessment (vendor due diligence1), an investigative analysis that verifies legal, financial, tax, and operational aspects to identify potential problems or risks. And for that, this information needs to be organized and ready before the first contact with potential buyers. This level of preparation takes time, sometimes weeks or even months, especially in companies that do not follow formal governance standards and/or are not used to reporting their results to minority shareholders.
In any mergers and acquisitions (M&A) process, interested investors will, without exception, analyze the company’s financial statements from two complementary perspectives: the accounting and the managerial. The first presents the official snapshot of the business, recorded in accordance with accounting standards and principles; the second reflects the economic reality of the operation, highlighting the company’s adequate capacity for wealth generation and recurring performance. Between these two views, it is essential to present an apparent reconciliation — a bridge that transparently explains the adjustments made to transform accounting figures into managerial indicators.
Furthermore, the investor will seek to understand the consistency between these numbers and the main fundamentals of the operation, such as the debt ratio, the composition of working capital, labor and tax contingencies, the corporate structure, and the key contracts that support the business. This integrated view allows one to understand the company’s actual risk and return profile and form a solid judgment about its value.
Do you know exactly what information the investor will request? Do you have all the information organized, or will you leave it to the last minute?
2
Starting the process without adequate technical knowledge
The buyer, especially when it comes to strategic groups or investment funds, has usually already participated in several acquisitions, has an internal team dedicated to the subject, and has specialized advisors at each stage of the transaction.
Terms such as locked box2, completion accounts3, working capital peg4, earnout5, representations and warranties6, escrow7, non-compete8, and bridge to cash9, among countless others, are part of the everyday vocabulary of these buyers. But knowing the literal translation of these concepts is not enough. It is necessary to understand where and how they rely on these mechanisms to justify their positions, especially when they use technical arguments to support initial offers lower than the seller’s expectations. Many entrepreneurs, however, enter this type of negotiation with limited knowledge of these structures and, without the proper technical support, end up dealing with critical issues on the fly.
Understanding these concepts in depth enables them to be used strategically, keeping the discussion high and balanced. More than just defending themselves, prepared entrepreneurs can turn the tables and apply the same technical fundamentals to reinforce their value position.
This difference in posture and mastery usually translates into a 20% to 30% improvement in negotiation outcomes. Awareness usually comes later: what was not perceived or well-negotiated at the beginning appears in the final contract, and is already embedded in the check, with a negative impact on your company’s value. Having clarity on technical concepts and knowing how to use them is essential to achieving speed and effectiveness in negotiation and maximizing the value of your company.
3
Anchoring the price too early in the conversation
It is common for entrepreneurs, at the first sign of interest, to feel pressured to mention a value so as not to miss the chance.” But, in M&A, how the conversation evolves matters as much as what is said. Presenting a number prematurely can limit the negotiation to a range that does not reflect the company’s true potential.
More than just an isolated number, valuation is the starting point of a complex equation that includes the transaction structure, the type of buyer, the perceived synergies, and the degree of competition for the asset. Well-structured processes create competitive environments that increase perceived value and often bring the final price closer to the synergies the buyer projects, rather than the company’s financial multiples.
Without this strategic context, the price tends to conform to the seller’s initial expectations rather than to the real value they could capture in a dispute.
4
Believing that the buyer wants the same outcome as you
In an M&A negotiation, seller and buyer rarely share the exact definition of a “good deal.” For the entrepreneur, the focus is on value and how much they will receive. For the buyer, the focus is on return and how much they can still extract.
While the seller seeks to close a life cycle, the buyer is just beginning another. This difference in time horizon completely changes the behavior at the table. The seller wants liquidity and quick closing; the buyer, security, predictability, and future margin. The seller thinks about the exit value; the buyer, about the entry value.
The naiveté lies in confusing cordiality with alignment.
Many businesspeople interpret the buyer’s empathy as a sign of partnership, when in fact it is a matter of technique. Professional buyers cultivate warm relationships, not out of affection, but out of strategy. A seller who is at ease, confident, and relaxed is more likely to concede.
The mistake is not in trusting, but in confusing tone with interest. The buyer is neither an enemy nor an ally. He has a fiduciary duty to his shareholders, not to his legacy. His role is to capture value, not to preserve it. M&A negotiations are disputes fought with diplomacy. Those who interpret kindness as partnership lose millions without realizing it.
5
Ignoring the Impact of Invisible Uncertainties
Between the value the buyer offers and what the seller actually receives lies a chasm called due diligence. It is at this point that the initial offer begins to be discreetly reduced, in some cases significantly, depending on the level of preparation and clarity of the information presented. Each uncertainty identified, however small, becomes an argument for discounting, retaining, or postponing payment.
These reductions rarely stem from concrete problems. Most of the time, they arise from gray areas: informal contracts, inconsistent accounting policies, outdated provisions, poorly documented tax regimes, or simply a lack of clarity in the numbers presented. The buyer does not need to prove that there is an error; it is enough to demonstrate that there may be. And each open doubt is converted into a potential risk, preemptively discounted in the price.
Mastering the technical tools to counter excesses is essential to preserving the value of the offer. Countering sophisticated arguments with credibility requires an arsenal of well-defined concepts that allow one to respond with elegance and precision, transforming questions into opportunities for clarification rather than automatic concessions. Knowing when an adjustment is justified and when it is merely an exaggeration disguised as prudence is what separates a legitimate review from a silent erosion of value.
In M&A, the buyer does not pay for what the company is worth, but for what they understand the risk of buying it to be. Whoever does not eliminate uncertainties or does not know how to neutralize technical exaggerations, with basis and serenity, gives the other side the right to define the price. And the price of doubts is, invariably, charged to the seller.
6
Underestimating the power of confidentiality
Few aspects are as neglected and, at the same time, as dangerous as the lack of confidentiality in an M&A process. The sale of a company should be treated as restricted information, accessible only to those who need to participate in the decision-making. Bringing up the subject prematurely can generate internal noise, instability, and even devaluation of the business.
Customers may begin to doubt the continuity of the business relationship, suppliers may revise deadlines and conditions, and employees may feel insecure and demotivated. The mere rumor of a sale can cause an operational slowdown that, in some cases, directly affects results, precisely at the moment when the buyer is analyzing the company’s performance.
It is also a mistake to rely on employees to help with the negotiation. However good they may be, they are not prepared to deal with the pressure and the natural setbacks of the process. Each round of talks involves advances and setbacks that require skill, emotional detachment, and technical mastery of complex topics. When employees witness impasses or see the entrepreneur back down, the damage is silent but profound: it undermines the authority and morale of the leadership.
If consulting services are hired, this already represents a significant advance, but even so, some basic precautions are essential. In initial contact with potential investors, avoid revealing the company name, and use a blind teaser10 that presents only the information necessary to spark interest. In all shared material, adopt a watermark with the recipient’s name and your organization’s name. Require the signing of a confidentiality agreement (NDA – Non-disclosure Agreement11) before releasing any sensitive data and use secure data room platforms12, configured to prevent the download or copying of strategic documents. Remember: in a competitive process, several investors may have access to your records, but only one will write the check.
In M&A, discretion is more than prudence; it’s strategy. Communication about the transaction should be made only after the contract is signed and, preferably, after the money is in the account.
7
Losing Control of the Process
One of the most subtle and costly mistakes is allowing the buyer to lead the process. In M&A, the structure, pace, and order of events directly influence the outcome. When the seller merely reacts to the buyer’s requests without establishing a clear roadmap with deadlines, rules, and deliverables, they relinquish control and allow the other side to dictate the pace, tone, and inevitably, the price.
Within an organized process, with well-defined stages, deadlines, and objective criteria, the simple fact that there is a structure gives the buyer the perception that there is competition. And this completely changes the dynamics. The law of supply and demand applies to any asset, including the sale of a company. When the buyer realizes they are alone at the table, they tend to test the seller’s limits, extending deadlines, adjusting conditions, and reducing the price, because they don’t feel pressure to move.
The entrepreneur’s excessive dedication to the sales process can also become a problem. The more involved he gets in the negotiations, the more the main deal loses momentum, and the buyer often interprets this slowdown as justification for reducing the offer. Choosing an independent advisor, free from conflicts of interest and with experience in conducting competitive processes, is the best way to maintain prominence and avoid leaving millions on the table.
As José Saramago said, Let’s not rush, but also avoid wasting time.
Glossary
1 Vendor Due Diligence – Preliminary assessment carried out by the seller before starting the sales process. It allows identifying risks, contingencies, and financial, legal, or operational inconsistencies that could be pointed out later by buyers.
2 Locked Box – Pricing model in which the price is defined based on a reference balance sheet before closing, ensuring predictability and avoiding subsequent adjustments.
3 Completion Accounts – An Alternative system to the locked box, in which the final price is adjusted after closing, based on the effective financial statements at the date of completion of the transaction.
4 Working Capital Peg – Reference value of working capital established between the parties. If, on the closing date, the working capital is above or below this value, the purchase price is adjusted proportionally.
5 Earnout – Variable portion of the sale price, conditional on the future performance of the company after the completion of the transaction, usually linked to revenue or profit targets.
6 Representations and Warranties – Declarations and guarantees made by the seller regarding the company’s financial, legal, and operational situation. They serve as the basis for any indemnification to the buyer.
7 Escrow – Linked account created to retain part of the sale value, used as collateral to cover possible future liabilities or discrepancies.
8 Non-compete – Non-compete clause that prevents the seller from engaging in similar businesses for a specified period after the sale.
9 Bridge to Cash – Financial adjustment that converts the company’s equity and accounting position into cash flow available to the buyer, reflecting the practical economic value of the transaction.
10 Blind Teaser – Introductory document, without company identification, intended to arouse the interest of potential buyers, while preserving the seller’s confidentiality.
11 Non-Disclosure Agreement (NDA) – A confidentiality agreement signed by the parties that protects the secrecy of all information shared during the negotiation process.
12 Data Room – Secure virtual environment where sensitive company documents are stored and made available for analysis by investors during due diligence.
