My deal is still attractive, but the price may be wrong.
Zsolt F. — Managing Director
I spend a lot of my time in M&A and PE circles, especially in Luxembourg and in the Netherlands.
Some people recognize me for my flamingo obsession, and it has become my accidental calling card, even among people at major private banks I would rather not name. But that's fine. It starts conversations and in my line of work, conversations tend to drift towards risk, value and price.
One summer in Luxembourg, on one of those nice, colorful trams, I was on the phone discussing two potential acquisitions. Both were around the billion-dollar mark. One involved an accounting scandal; the other, a cybersecurity breach. The impact on value being discussed was roughly $150 million in each case. Same number, but different conversations. That very moment captured something I keep coming back to. Findings from due diligence are not just a shopping list of defects. They are decision points about what business you are actually buying, under what assumptions, and who carries the downside risk if those assumptions prove wrong.
I come from a cybersecurity background - a label I cannot seem to shake, however hard I try. But this makes me naturally attentive to systems and the gap between what is documented, what people say, and what is actually true. I have helped assess acquisition targets at an early stage, and I have worked in post-merger integration contexts as well. That has made me wary of the phrase, "We can fix this later."
Sometimes we can. But at what cost, on what timeline, and with what material impact on the investment narrative? It is important to be clear about my own experience. I have had numerous conversations about M&A and Cybersecurity on the ground, on trains, on the water and in the air with lawyers, investment bankers, financial professionals, doctors, radar technicians, military personnel and other professionals. I have not personally seen a deal collapse solely because of a cybersecurity problem. I have, however, seen a deal fall apart because of the projected cost of IT integration.
Those costs are not always the target's fault. The seller sells the story. The buyer inherits the reality. Sometimes issues arise from the buyer's own operating model or integration ambitions. But when the integration costs outweigh the expected synergies, that is still a buyer-side decision about the value.
Cyber has affected price in my experience. Integration economics have stopped a deal. This is where I think that legal, financial and technical (and sometimes HR and cultural) perspectives need to meet early on.
A due diligence finding is not a discount coupon. It may have economic consequences, and the response needs a clear owner. Reassessing sustainable earnings, agreeing appropriate completion accounts mechanics, and negotiating specific indemnities, escrow arrangements or holdbacks are different responses to different issues. They need to be carefully chosen, depending on the exposure and the deal structure. Completion accounts operate through agreed definitions and calculations; and they are not a general mechanism for repricing every due diligence finding. None of them is a substitute for understanding the underlying exposure. Nor does discovering a problem, by itself, create contractual right to reopen an agreed price. The transaction documents and the applicable law matter.
And insurance is not a magic wand either. Warranty and indemnity insurance typically covers losses arising from unknown breaches of insured warranties, subject to the policy's terms and exclusions. Known issues identified during the due diligence process are generally excluded, although separate cover may be available for certain specific exposures.
For the kinds of technical issues I encounter, that distinction matters. My aim in the Luxembourg and Dutch M&A communities is not to turn lawyers or executives into cyber specialists, or cyber people into lawyers. It's about connecting the dots early enough that legal, financial, commercial and technical colleagues are discussing the same facts and the same exposure and the same decision. Sometimes the right outcome is a lower price. Sometimes it is better protection, funded remediation or simply accepting the risk with open eyes. And sometimes, as with integration costs, it means walking away. I am not interested in creating excuses to chip away at every deal price. I am interested in not paying for assumptions that nobody has owned.
A target can remain attractive after difficult findings. The original terms might not.
Now that we know this, are we still buying the same business?
2 October 2026
with Kind Regards from
Zsolt F.
P.S. My heartfelt thanks go to my extended family for their patience and support, and to the roughly 2,500 people who have generously shared their time, advice and experience with me over the last couple of years. This may be a short article, but there are a great many conversations and people behind it.
-- originally appeared on https://www.linkedin.com/pulse/my-deal-still-attractive-price-may-wrong-zsolt-Zsolt F.-nnawf/
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