Whether a company is a buyer or a seller, an M&A transaction can be a rewarding experience. Such transactions often offer a way to unlock value, capture additional market share or expand into new business lines. In an ideal transaction, both parties realize significant benefits. However, closing an M&A transaction is no simple procedure. It requires tremendous effort, experienced guidance and considerable foresight. Issues arise constantly and must be understood, discussed, negotiated and resolved. Most are minor and easy to handle if both sides adopt a reasonable approach. Sometimes, though, a major issue will crop up that threatens to sink the entire deal. Such an issue will generally come in one of two flavors: systematic or unsystematic. Systematic issues are caused by things like a terrorist attack, an act of God, or some other force majeure, as lawyers like to say. Systematic issues are impossible to foresee. Unsystematic issues, on the other hand, fall into several categories and are for the most part entirely preventable. Some of these unsystematic issues can be avoided simply by exercising good judgment and others require the deft touch of an experienced professional. Avoiding these pitfalls is critical to a successful M&A transaction.

What follows are five common situations that can cause deals to unravel.

1. Missing your numbers
A deal typically takes six to nine months, sometimes longer. Because of the time involved, a buyer will want to see updates to the financial information as the process moves along. They typically compare actual performance against what was provided in the information memorandum. Small deviations are expected, and buyers generally acknowledge that management may have been distracted by the sale process itself. But if the actual results fall too far behind the forecast, the buyer must ask whether the full-year forecast is achievable and, by extension, whether the company's guidance on long-term expectations is reasonable.

2. Skeletons in the closet
A well-written information memorandum will disclose any known environmental or litigation problems or the fact that the entire management team is retiring within a year. Some buyers will take a pass after reading the memorandum, but those that keep looking are implicitly saying that they can find a workaround. But when a buyer finds out in due diligence that the company is the subject of a huge lawsuit or its primary patents are expiring next year, it may begin to question the seller's credibility and integrity. If trust is violated between buyer and seller, the deal is unlikely to move forward.

3. Changing the deal
Nothing upsets the other side more than "retrading" after a letter of intent (LOI) has been signed. Some buyers are notorious for using post-LOI due diligence to find issues and then leveraging those to ask for a price adjustment. Most good buyers, whether corporate or private equity, will avoid price adjustments except in extreme cases, and if they must ask for one, they will do so very carefully. This issue cuts both ways and changes from the seller post-LOI can also sour a deal. For example, adjustments to rollover equity or ongoing owner/CEO compensation, as well as non-financial changes, such as how long a seller is willing to stay on to transition leadership, can also fundamentally alter a deal.

4. Forgetting Uncle Sam
Like it or not, we all have to pay taxes. The particular circumstances and structure of a transaction will greatly influence the final tax bill, and getting a good tax adviser involved early can help both buyers and sellers use the most tax-efficient structure. Further, a tax adviser can calculate the take-home amount that a seller will receive from a transaction. Too often, sellers wait until the last minute to engage a tax adviser and find that their take-home proceeds are lower than expected. In the worst case this can sour a deal, and even if the deal moves forward, the seller could be leaving money on the table by using an inefficient tax structure.

5. Inexperienced deal professionals
Inexperienced deal professionals, whether lawyers or M&A advisers, are more likely to sour a deal than secure a good outcome. It's the details that matter, such as which items in a purchase agreement are worth arguing over and which are not, setting seller expectations, and documenting add-backs and adjustments.

The seasoned professional can assess the situation and know exactly where the landmines are likely to be, while a less-experienced professional often focuses on the wrong issues and could miss some huge potholes.

Doing deals is a tricky business. At times it can feel like you are pushing a rock up a hill. And even if unsystematic issues are never encountered, there is no guarantee that a deal will close. But M&A can be enormously beneficial for parties on either side of the deal — indeed, for both sides. Sellers can reap the fruits of their lifetime of hard work, and buyers can gain key strategic advantages that will catapult them to a new level. Avoiding the myriad issues that stand in the way of these outcomes takes a lot of work, a great deal of experience and a goodly amount of creativity. In the end, though, the effort can be worthwhile.

Erik Egerer is a manager with Grant Thornton Corporate Finance. This article was reprinted with permission from Grant Thornton.