Key Takeaways

  • Fahim Ahmed of BC Partners observes that transaction processes frequently stall from signal distortion introduced by intermediary investment bankers rather than asset defects.
  • Adrian Letts of Brookfield points out that buyers often read negative sector headlines and assume worst-case exposure rather than asking the seller how the news impacts the portfolio company.
  • Direct principal-to-principal discussions allow sponsors to address buyer reservations and grant short-term pauses to verify data, preventing premature process cancellations.
  • Alex Greenbaum notes that prolonged, visible exit processes create commercial vulnerability, allowing enterprise customers to extract concessions during contract negotiations.

The Intermediary Filter Breaks Sponsor Alignment

Investment banks run sales processes on rigid timetables designed to generate competitive tension. Yet that structure often backfires when macro shifts or industry headlines hit mid-flight. When communication runs exclusively through intermediaries, buyer caution gets translated as declining conviction, and seller defense gets interpreted as evasiveness.

Fahim Ahmed of BC Partners sees this dynamic derail transactions where both sides actually want an agreement. As Ahmed explained, “There are sometimes situations where perhaps the buyer has misunderstood certain signals that have come during the process and are going in one direction where everybody has the incentive and intention to get a deal done.” Intermediaries often polish or filter feedback to maintain deal momentum, but filtering creates noise. Ahmed noted that “every now and then having a direct conversation can really help get that type of issue back on track so that you have a real meeting of minds.”

Headline Risk and the Second-Guessing Spiral

Unfiltered communication matters most when external shocks strike an active auction. Adrian Letts of Brookfield points out that prospective buyers routinely read industry headlines, assume the target asset is impaired, and quietly back away or slash valuation models.

“I think oftentimes process breaks down because there isn't great communication, and people are second-guessing each other and making assumptions about things that may not necessarily be the reality,” Letts observed. In his view, buyers absorb negative press without testing the operational reality: “I as a buyer might have read a headline around something of how it's gonna affect the industry, and I take that as fact in terms of how it's affecting the company that I'm buying rather than, 'Adrian, I read this headline. I'm seeing this commentary in the newspaper. How do you think that affects the business that you're selling to us?'”

When principals speak directly, the seller can address the headline head-on. If the buyer needs two weeks to model raw material pricing or regulatory shifts, a direct discussion allows the seller to grant a brief pause. Investment bankers often resist pauses because pauses threaten auction urgency. Principals understand that a controlled two-week delay beats a failed process.

Information Leaks Create Commercial Vulnerability

Stalled processes carry severe operational costs beyond wasted legal fees. When auctions drag out or fall apart in the market, counterparties take notice.

Alex Greenbaum highlighted how information leaks arm customers and suppliers with predatory bargaining power. “Another one is sometimes when people know you're exiting, they try to use it,” Greenbaum explained. “That leaks into the market. Sometimes counterparties, customers try to use it against you. You know, so you're in a negotiation about a contract, they know you're in a sales process and they go, 'I know you can't afford to lose my contract right now.'”

Every additional week a transaction hangs in limbo increases the odds of customer hold-up. Prolonged intermediary friction endangers the closing while actively eroding the baseline revenue of the portfolio company being sold.

Why It Matters

This dynamic signals a shift in sponsor-to-sponsor transactions, where the standard banker-run auction model struggles under macroeconomic uncertainty. When sector volatility creates valuation gaps, strict intermediary barriers destroy transactions that direct capital allocators could otherwise restructure or preserve.