Stephen von Muenster.
Stephen von Muenster, Legal Partner, SQUAD M&A
The Australian agency M&A market is active — but it’s far less forgiving than it used to be.
“The best exits aren’t negotiated at the end — they’re built years before the process begins.”
In today’s market, removing doubt and being able to sell something real is what creates value and generates attraction to an independent.
And most founder traps? They’re avoidable — if you know where to look and if you start early enough.
After experiencing two decades of deal cycles, one pattern is clear: most deals don’t fall over on price — they fall over on preparation and governance.
And more often than not, the issues sit squarely with the founder. Here are some tips and traps to highlight some of the issues faced by founders.
Trap 1: Believing growth equals value
Many founders assume strong revenue growth and a solid client list are enough to secure a premium outcome.
They’re not.
Today’s buyers are asking a different question: how secure is that revenue through the earn out and beyond?
If income is tied to a handful of clients without formal contracts, or based on relationships rather than agreements, it immediately raises doubt and creates risk for the acquirer.
“Buyers aren’t just buying potential growth and the team — they’re buying the certainty of what exists now.”
That doubt doesn’t just impact valuation — it can stop a deal entirely.
Trap 2: Leaving legal too late
One of the most common — and costly — mistakes is treating legal as a late-stage step and after an approach has been made.
By the time a Share Sale Agreement lands, the commercial position is largely set. Founders often discover too late that early-stage documents — like term sheets — may already contain binding elements.
“If you wait for the contract to call a lawyer, you’ve already lost leverage.”
The reality: legal isn’t there to “paper the deal”. It shapes the deal.
Trap 3: Weak foundations exposed in due diligence
Due diligence is where narratives and blue skies are tested — and often unravel.
Common issues include:
· No formal client contracts
· Misclassified employees and contractors
· Non-identified and unprotected intellectual property
· Misaligned or poorly structured shareholder agreements
· Poor corporate governance
Individually, these may seem manageable. Together, they create a bigger issue:
“What exactly is the buyer acquiring?”
At that point, the buyer will either discount the up-front heavily, push value into earn-outs — or walk away.
Trap 4: Underestimating risk transfer
Many founders assume that once a deal is done, risk transfers to the buyer.
In reality, it often doesn’t.
Through warranties and indemnities in the Share Purchase Agreement, buyers can push risk back onto the seller — particularly if issues weren’t properly disclosed or structured upfront.
A common example is employment classification. If contractors should legally be employees, founders can still be exposed to tax liabilities post-sale.
“The deal doesn’t end at completion — that’s often when the risk begins.”
Trap 5: Thinking the process is purely financial
M&A is often viewed as a numbers game. It isn’t.
Ego, emotion and negotiation style play a critical role — especially in competitive or cross-border deals.
The wrong tone in a negotiation, or an overly aggressive approach (including from advisors), can derail momentum and trust quickly.
There are cases where deals have collapsed before they even began — simply because the process became too difficult to navigate.
The reality for founders
The agencies getting deals done today aren’t just high-growth — they’re well-built.
They have:
· Clean legal and financial structures
· Solid internal and external stakeholder contractual relations
· Demonstrable corporate governance
· Contracted, defensible revenue
· Aligned shareholders
· And advisors who understand how to get a deal done — not just negotiate one