A M&A deal dynamics can be simplified and visualised to its three core characteristics. To this effect, it can be shown as a triangle with three variable factors placed in each corner – Asset, Price and Time. The purpose of dealmaking is reaching an agreement on at least those three fundamental aspects. All conditions equal, a change in one factor necessitates a corresponding adjustment in one or both other factors. Otherwise, there will be a higher risk that the deal be delayed and/or aborted.
What is the meaning of The Time Factor?
Time is a critical factor in deal making in so many aspects.
Time to evaluate, negotiate, close and implement the deal.
Time to plan and project reorganisation, integration, growth, scale.
Time to onboard people: stakeholders, management, employees, vendors, customers and/or replace (some of) them.
Time to achieve the desired operational and financial results, earn outs, next tranche of a deferred payment.
Time to accelerate and/or augment the acquired/combined business organically and/or by acquisitions.
Time to develop and nurture trusted relationships with professionals, advisors and experts – to bring them in swiftly and efficiently to help you design and support your business plan and objectives.
Lesser the time, lesser flexibility and higher risks.
We see buyers with a higher risk appetite but hunting low(er) valuations. The old margin of safety adage: it can’t be a bad deal if you buy it below value. (Caution!)
Time-related value and risks must be explicitly dealt with and agreed in the transaction documents with clear obligations and responsibilities. In the rush to ink the deal, that should not be omitted and left to chance.
How to deal with The Time Factor in an M&A context
- What tools help manage the Time Factor?
A deal is a process, ideally a flow. From start to end it needs to be organised/structured. The parties start with a plan (each with its own) and then combine their plans and agree on a common plan, often in the form of a letter of intent or a memorandum of understanding or a termsheet. To implement a plan, discipline, regular progress checks and adaptation to changes are required. The tools that advance the deal process include checklists, document and information request forms, action plans, best practices, etc.
The document sets have been well-established, categorised and catalogued (say, by relevance, jurisdiction, type of asset, industry, deal structure etc.) in the advisers’ knowledge data bases, where models, templates, precedents, boiler plates, can easily be reused and tailored to the particular matter/deal at hand.
2. Where to place the Time Factor in the Transaction Documents
Generally, the deal contract/s must incentivise the parties (separately and together) to follow and comply with the agreed timeline/s and essentially take action where and when required. Just a few examples to illustrate:
a. The rules that set out the parties’ relationship before entry into a binding contract, i.e. the non-binding termsheets/LoIs. We must emphasise how important those initial documents are to design and protect a viable deal process end-to-end. All key time-related aspects need to be included, so that each party (and a third independent person eventually) understands and commits to a common timeline, including milestones, responsibilities, incentives and penalties. Absent a timeline that’s been accepted by all parties, the next phases of the process are wishful.
b. Negotiations (in parallel to due diligence) have to be managed and conducted in accordance with the agreed timeline. A delay in that phase will certainly lead to further delays down the road. Each delay increases the risk of the deal been aborted or a costs increase, losses and opportunity costs. All advisors must act in synchrone and follow the timeline in a coordinated manner. This has already become easier with the help of all tech and communication tools that enable swift, often instantaneous, review, analysis, turnaround, feedback. The advisers’ know how and best practice ensure the parties’ compliance with their timeline, thus, rarely a delay should be caused (or contributed to) by an adviser’s late response/output.
c. After signing of the binding transaction documents (based on which, among others, each party agrees to be liable to the other for failing to perform in time and to compensate/indemnify damages and losses), next phase is the period between signing and closing. Here everyone should be aware of the pressure to complete all pending tasks/conditions in time for the closing to actually occur. The checklists are on everyone’s desk – monitored and updated obsessively; advisers chase each other and the parties relentlessly. Now the stopwatch is in front of anyone concerned, can’t be ignored. Still, bad planning, bad deal structure (or presentation to the competent authorities or third parties), bad execution can derail the deal late in the process – especially today, in the current environment, with high unpredictability and insecurity, changing fundamentals across geographies and industries.
Lawyers’ job is much more than drafting and negotiating some fairly standard transaction documents and help with regulatory approvals, corporate resolutions and registrations. M&A lawyers can help dealmakers deal with the Time Factor in a cost- and risk-reducing manner, preserve/protect the value of the underlying businesses and assets, and ensure the anticipated value creation, synergies and efficiencies will be actually possible.
First published in CEE Legal Matters, 18 March 2026