15 Biggest Challenges During M&A & How to Overcome Them

Executing mergers and acquisitions (M&A) is far from easy. The M&A process is extremely complex and tedious, requiring precision, alignment and experience. In addition, every step of the way is filled with risks and uncertainties, in part because M&A involves dealing with a lot of people. To make things more difficult, every deal is unique, which means deal problems differ from deal to deal and can be difficult to anticipate. 

Over time, you’ll find that these deal challenges fall into a handful of major categories.  

Recognizing them early helps increase your chances of success while saving time and money in the process. 

At DealRoom, we help companies streamline their M&A processes. Drawing on that experience, we’ve identified the most common challenges that companies face during M&A and included practical recommendations to address each one, so you can make better decisions on your next deal.

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Top Challenges in Mergers & Acquisitions

1. Pre-Deal Strategy & Market Conditions

Even before the due diligence process begins, a deal can sour if the pre-deal strategy is flawed or the market conditions change. Teams can get over-excited about an attractive target and rush through the early-stage legwork of articulating the rationale and strategic objectives for the deal. Acting without a well-defined thesis for the investment (market growth, technology gain, supply chain consolidation, etc.), each subsequent decision is made on a foundation of assumptions.

Market conditions also come into play here. A sudden increase in interest rates can make capital more expensive. A competitive bidding situation may result in valuations being driven far higher than can be justified on the expected returns. Changes in regulatory environments, trade policies, or industry-specific M&A trends may all impact the risk-reward profile. A deal that seemed attractive in a low-rate, high-growth market may become a liability in an economic slowdown or when financing becomes tighter.

Management can combat these issues by stress-testing the investment thesis against various scenarios. Build financial models that factor in higher borrowing costs or a reduction in customer demand. Keep a close eye on regulatory changes and competitor activities beyond just the initial screening phase. 

If the corporate strategy, finance, and deal team align from the beginning, the goal becomes less about grabbing the latest great opportunity and more about strategic fit and resilience. DealRoom’s M&A Platform helps with this by providing a central repository for strategy documents, market data, and team collaboration, so everyone is working with the same information and assumptions as the market shifts.

2. Alignment on the Deal Thesis

M&A is a not a strategy in itself. It’s a powerful tool to help achieve a company’s broader strategy, but too often, the team driving the deal (especially the integration team tasked with value creation) doesn’t fully understand why the acquisition is being pursued in the first place.  

In a perfect world, the deal thesis will dictate the integration strategy. This, in turn, affects the valuation of the target company and what the M&A team should focus on during the due diligence phase. YES, alignment is that crucial. 

Alignment also includes the target company. Most buyers do not include the target company into their integration planning. But the reality is, they have expertise in the business (which is why the business was acquired in the first place), and they will be an integral part of the merged entity. If the incoming team does not like the post-acquisition plan, it could lead to insubordination, poor performance, and key employees leaving the company.  

To overcome this M&A challenge, clear communication and transparency are critical.  Everyone involved needs a shared understanding of the strategy and the deal rationale to bridge gaps in expectations. Start with a kickoff meeting to align all parties and follow up with regular sprints to keep that alignment on track. 

The same applies to the seller’s team. Explaining the rationale behind the deal helps them see why certain changes are necessary and makes them more receptive to those changes.  Ultimately, both sides want the acquisition to succeed. 

3. Building the Pipeline

When starting out, building a quality acquisition pipeline may seem daunting. With countless companies to consider, it’s easy to feel overwhelmed - or worse, to fill the pipeline with the wrong target companies. 

To build an effective pipeline, corporate development teams should work closely with stakeholders across the company to understand the real needs driving inorganic growth. This input leads to smarter decisions about which prospects to pursue. 

Market mapping is also an effective way to focus M&A priorities and align with business units on the M&A strategy. Companies can use this tool to identify strategic fits, map out competitors and their market share, spot emerging trends, and facilitate long-term strategic planning. 

Creating the pipeline requires collaboration with business unit leaders, the product team, corporate strategy team, and others. And the work doesn’t stop once it’s built: the database needs ongoing monitoring and management, with regular updates as market conditions change. 

For more effective and easier pipeline management, use M&A tools like DealRoom.

4. The Knowledge Chasm between Diligence and Integration Teams

The knowledge gap between the diligence and integration team is arguably the biggest challenge in M&A. These are two completely separate teams inside an organization, with two different goals in M&A. The diligence team is in charge of assessing the target company’s value and potential risks, while the integration team is in charge of creating value post-acquisition. 

Without strong communication, information silos emerge. Diligence findings can be overly optimistic, and the integration team may miss key details needed for a smooth handoff. This often leads to redundant questions and rework during integration.

The best way to address this challenge is to involve the integration lead as early as possible, especially in the due diligence process, to ensure continuity and understanding of goals and insights. Some companies go further, letting the integration team lead due diligence to streamline the process and improve outcomes. 

5. Integrating Cultures

When two companies with different corporate cultures merge, conflict is almost inevitable. This is especially true in cross-border deals. 

Culture clashes make employees on both sides uneasy about the changes and less productive. The impact extends to customers, too: a poorly managed cultural fit can hurt brand perception, erode trust, and reduce customer loyalty. 

History shows that even billion-dollar deals can fail due to cultural misalignment. Buyers need to define their own culture first. Knowing what’s non-negotiable helps identify targets that are truly compatible. 

During due diligence, give cultural integration the same weight as financial and operational reviews. Understand what makes the target’s culture unique and whether those elements can survive integration. If they can’t, it may be best to walk away from the deal. 

6. Negotiations 

Negotiation is always a challenge in any M&A deal, whether it’s negotiating the price, purchase terms, key executives’ future roles, or potential liabilities. The biggest obstacle, however, is often emotion. 

The most common source of conflict during negotiations is when the seller is too emotionally attached to their business. This can lead to unrealistic expectations about valuation and what their role would be post-acquisition. 

Disagreements also arise when the parties can’t align on the integration plan or how to run the business after the deal is closed. 

Effective negotiation starts with the right mindset: be fair and transparent, set clear objectives, and stay flexible where compromise is possible. Always look for a middle ground that works for both sides.

Aim to maintain positive relationships throughout this process. Understanding that the target company’s employees and management will become part of the acquiring company is crucial to the success of the post-merger integration. 

If discussions become too complex, consider bringing in neutral M&A advisors who can help break deadlocks and surface creative solutions. Once the terms are finalized, shift the focus to preparing and planning for post-deal integration.  

7. Managing Risks between Signing and Closing

In M&A, signing and closing rarely happen simultaneously, especially in public deals, and the gap between them carries significant risk. The longer a deal takes to close, the higher the risk exposure for both sides. 

One of the biggest challenges in this phase is the operational risk. The target company must keep running its business at full strength even though the deal isn’t final. At the same time, the buyer can’t intervene in day-to-day operations before closing because of gun-jumping laws. If performance drops or material changes occur, either party can legally walk away.

Regulatory approvals add more uncertainty during this stage of the M&A process. If antitrust or other regulators block the transaction, the deal collapses and the timeline stretches out. Closing conditions, such as shareholder or third-party approvals, present additional hurdles.

Buyers can protect themselves with interim covenants that require the seller to maintain operations and meet specific performance metrics before closing. If those metrics aren’t met, the buyer can walk away from the deal. Legal safeguards, such as warranties, indemnities, and representations in the acquisition agreement, further protect against liabilities that may emerge during this critical period.

8. Employee Retention

Employee retention is the most common challenge in deal-making. Employees didn’t choose the acquiring company and may fear layoffs, changes to roles or pay, and new management practices that disrupt their daily work.

If these concerns aren’t addressed quickly, people start looking for new jobs. Losing key talent disrupts operations and delays value realization, while training replacements consumes time and resources.

A strong change management plan focused on employee retention is critical. Address employee concerns very early, before uncertainty spreads, to build trust and stability.  

Middle managers play an essential role here. As the link between frontline staff and senior leadership, their buy-in can go a long way toward reassuring employees and keeping them engaged throughout the transition. 

9. Getting the Right Valuation

Getting the valuation right is crucial for buyers. Every M&A deal must make financial sense, with approvals based on specific assumptions and a corresponding price tag. But if that valuation turns out to be wrong, then the entire deal might not be viable after all. 

While valuation itself is best handled by experienced M&A advisors, one area often overlooked is integration budgeting. Buyers may focus heavily on projected synergies but forget that integration itself costs money. Those costs need to be factored into financial models to avoid unrealistic expectations for synergy realization.

Integration expenses generally fall into two buckets: one-time costs and recurring costs. For example, merging two supply chains may promise significant savings, but achieving that efficiency can require substantial upfront spending. Accounting for those one-time investments is essential to ensure the deal remains viable.

10. Performing Due Diligence without Overwhelming the Seller

Due diligence is a tedious process that requires a large team and careful coordination. It involves reviewing financial records, legal documents, operational processes, and more. This process gives the buyer a picture of the value and risks associated with the acquisition.

In practice, buyers often send hundreds of questions (sometimes 500 or more), and deploy 30 to 50 people to review the company. This can overwhelm the seller, creating stress and distracting them from day-to-day operations. 

What buyers can do is filter the due diligence list, and triage based on urgency. Focus on questions tied to the deal rationale and explain why each is necessary. This approach helps the seller stay engaged and keeps their business running smoothly throughout diligence.

11. Deal Fever 

Deal fever is common in M&A, driven by  excitement and pressure to close. It can happen to anyone, especially when teams become emotionally invested in a specific outcome or have already invested significant time and effort, making it feel impossible to walk away. 

Past success can also lead to overconfidence. Decision-makers may assume a new deal will follow the same pattern and start ignoring warning signs or unconsciously seeking only information that confirms their initial positive impression. This is where acquisitions fail. 

One proven strategy to combat deal fever is to run a Red Team Exercise. Create an independent group (separate from the deal team) whose mandate is to challenge assumptions, stress-test the plan, and try to dissuade leadership from moving forward. Their fresh perspective helps surface risks the core team may overlook.

Bringing in external advisors for unbiased opinions on the deal may also help give buyers a different perspective on the potential acquisition. It’s important to look beyond just the financials, and avoid moving forward without considering the integration aspect of the deal.

12. Managing Data Security and IT Integration

Merging two technology environments is a high-stakes challenge, as mistakes and inaccuracies can lead to data breaches and leaks of sensitive information. A botched tech integration can also slow down or even kill the transaction. 

As sensitive customer, financial, or product data is shared between teams during due diligence and integration, the risk surface increases exponentially. One data breach incident can erase value creation, attract unwanted regulatory attention GDPR or CCPA and undermine years of customer trust building.

The best way to mitigate these risks is to conduct thorough IT due diligence, starting with a technology due diligence checklist. Dig deep into the target’s cybersecurity maturity, data governance practices, and compliance history. Look for red flags like legacy infrastructure, Shadow IT, or weak identity and access management (IAM) that could create risks.

Pre-close, map out a Day 1 IT plan that prioritizes secure communication lines, provides role-based access rights, and ensures critical systems are integrated first for business continuity. Have a longer-term integration roadmap that staggers migrations rather than attempting to integrate everything at the same time. Determine which platforms should be retained, migrated, or retired depending on your deal thesis and future scalability plans.

Assign a deal-specific M&A security champion to oversee data protection efforts from diligence through to post-close. DealRoom’s collaborative platform also has built-in controls to keep data safe such as locked-down document sharing, layered user permissions and an audit log to track real time activity, so you only need one secure environment for your entire integration team.

13. Post-Close Value Tracking & KPI Governance

Frequently, the most difficult part of a deal starts when the ink has dried. Operational and financial synergies, whether related to cost savings, revenue uplifts or churn reduction, will not happen automatically. The risk of losing steam in an integration effort, and of losing expected value, is real if appropriate metrics are not established and monitored continuously.

First, determine quantifiable KPIs to monitor that are tightly linked to the deal thesis. Common examples are targeted operating cost savings, cross-sell revenue uplift or customer retention. Define baseline and timeline pre-close so that everyone is aligned and clear on what to measure.

Second, put a post-close program management office or integration office in place to monitor those objectives. This group should have the right resources and reporting frequency, own the success of reporting and escalation and identify risks at the right time. To make it effective, they must also have the mandate to shift resources if needed to protect key milestones.

Lastly, create the continuous improvement loop. Measure and track regularly against synergy KPIs and adapt plans if and when necessary. This might mean revisiting some targets with the need to update or delay assumptions. DealRoom enables teams to keep track of the commitments after closing, through a single platform for KPI tracking, decision documentation, and accountability that lives past the closing date.

14. Navigating ESG Considerations

ESG (Environmental, Social, and Governance) considerations, once considered a nice-to-have, are now essential components of deal success. Questions about environmental impact, labor practices, and corporate governance are probed by regulators, investors, and customers with the same diligence once reserved for financial audits. Failing to address these areas can lead to regulatory fines, brand damage, and long-term operational risk.

Make ESG due diligence a priority. Assess the target’s environmental impact, employee practices, and governance controls, and identify risks such as pending environmental fines, poor workplace safety records, or lack of supply chain transparency. If your company has public sustainability or net-zero commitments, consider how an acquisition with significant emissions or weak governance could impact those goals.

Factor in remediation costs to your deal valuation. The process of bringing a target up to your own ESG standards, such as facility upgrades, supply chain modifications, or governance improvements, can incur significant costs. Model these expenses along with expected synergies to avoid negative value surprises.

Look for ESG-driven synergies. Enhancements to the combined operations in areas such as renewable energy use, responsible sourcing, or board diversity can create reputational value and lower the cost of capital. DealRoom’s platform allows you to capture and track these ESG-related action items so they become quantifiable value drivers instead of post-deal distractions.

15. Regulatory & Antitrust Hurdles

Deals can be delayed or derailed by regulatory reviews, particularly in cross-border transactions or those involving significant market share. Regulatory bodies such as the U.S. Federal Trade Commission (FTC) and Department of Justice (DOJ), the European Commission’s Competition Authority, and China’s State Administration for Market Regulation (SAMR) scrutinize large or sensitive deals. Each has its own standards and timelines, adding layers of complexity to the process.

Develop your pre-filing strategy early. Anticipate potential antitrust issues, gather information that regulators will likely request, and be aware of disclosure obligations in each jurisdiction. 

Avoid “gun-jumping” by refraining from merging operations or sharing sensitive competitive information before regulatory approval, as this can result in fines or further delays. If competition concerns arise, be prepared to offer remedies, such as asset divestitures or behavioral commitments, that maintain the strategic value of the transaction.

Extended reviews can deplete resources and distract management. To stay on track, set clear internal deadlines, continue integration planning for non-sensitive areas, and communicate realistic timelines to employees, customers, and investors. DealRoom’s M&A Platform can help teams track regulatory filings, coordinate responses to information requests, and keep deal documentation organized during long review periods, minimizing the risk of losing focus while waiting for approvals.