In my experience building and selling companies, the time between signing an LOI and closing the deal were some of the most emotionally turbulent moments of my life. It's an extraordinarily stressful period. One of the things Emil Michael taught me early in my career is that time kills all deals, and that you need to diligently compress the time between signing a term sheet and closing as much as humanly possible. One of the reasons is that as more time elapses you increase the likelihood that things can fall apart. In my opinion an equally important reason is that you need to minimize the mental anguish the process imposes on yourself and the team.
Pre-LOI you experience a honeymoon period. You fall in absolute love with your counterpart. Your shared vision is going to take over the world. You'll manifest your mission in a way you never dreamed of before. Teammates you care about deeply are going to make life-changing amounts of money (including yourself and your family). And all of the hard work everyone has put in over the previous years is going to be rewarded.
Then you sign a term sheet and everything changes on a dime. As they always do, incentives explain part of the story. As a seller, you want to make sure you quickly realize the terms in the LOI you happily signed. But as a buyer, you need to make sure you know precisely what you are getting and that you're mitigating any unnecessary risk. Even though both parties want to close, their respective priorities are inherently in conflict with one another. This creates a tremendous amount of emotional volatility. In many instances, things that seem impossibly small and insignificant in retrospect come dangerously close to blowing up a deal. Esoteric indemnity clauses that protect against .001% catastrophic scenarios feel completely insurmountable.
The feelings of love, respect, and excitement that emerge between buyer and seller in the pre-LOI process are promptly thrown to the wayside and things can become an irrational zero-sum game. It becomes difficult to differentiate between what is subjectively desirable versus what is objectively important. Ideally, you have a relationship with the counterparty CEO, but you can't escalate everything because it erodes goodwill and time kills all deals, so you choose your battles wisely (hopefully!) in belief that both sides can compromise along the way.
This is where counsel is important. Normally, your lawyer won't ruin your company unless they are flat-out dumb and do something egregious along the way. But in M&A the difference between good and bad counsel can make or break a deal. I've worked with people I consider to be good, and some I will never work with again. Every deal has its own dynamics, and sometimes outside counsel is not sensitive to your unique context. Sometimes they're sharks, other times they may be trying new techniques and tactics with you unwillingly volunteering as their first case study. Reference the living hell out of whomever you select because the last thing you need is a shitty lawyer derailing something special and driving you crazy. Choose wisely.
If you're not working with a banker, the other counsel you have is your board. Most entrepreneurs are not in tune with the incentives and experience of individual board members. For some, your company may be their first exit and they're super eager to put a point up on the board. For others, your acquisition may be a rounding error for their fund and your process is met with abject indifference. Some board members have been part of countless acquisitions on both sides, and others have done zero. You'll get conflicting advice. Some may say some terms are "off market" and that your counterparts corp dev team are a bunch of idiots. But they might be totally wrong because they don't have enough data points to actually pull from. As much as you may want to treat every board member the same, their respective sets of experience are not all equal. Consult them appropriately and hone in on whose advice actually holds the most credence. If not, conflicting advice across the table can spin you up into a tornado of confusion.
Another source of emotional tranquility or discontent comes from the acquirers corp dev team. I've sat across from people that I trust completely who know exactly how to run a good and fair process. They know what's important and what is bullshit and they'll explain to you why it's important in a respectful and objective way while thoughtfully listening to your reaction. I've also worked with people who are just not good at this role. Once again experience and incentives matter here. If the acquirer is early in their M&A journey, they likely have no idea what they are doing. Their corp dev person is probably junior, or its their first time in the lead seat, and their personal incentive is to make themselves look good. You are their training ground and they don't really care about you or your relationship. They're likely optimizing for making it appear like the company got a good deal and aren't giving much thought to the fact that you will have to constructively work together to make the deal successful over the upcoming years. Being treated disrespectfully by these people will make you downright livid. You will want to lash out but the only thing you can really do is complain to your colleagues. You have to play the shitty hand your dealt to the best of your ability and not let it get to you. I have profound appreciation for great corp dev people after having worked with some not great ones. They are unique in their ability to understand why people feel and react the way they do while not letting their own emotions impact their ability to get things done effectively for all parties.
The source of the most feelings, both overwhelmingly wonderful and not wonderful, is how your teammates react along the way. Some other important advice I got from Emil early on is to keep the circle of who knows about a deal as small as possible. Seldom does anything good happen when word gets around that a company is being bought or sold. The more people that are involved and aware of the process just means more avenues for things to leak. People grow excited. And concerned. The last thing you want is a company were everyone is super excited about an acquisition that subsequently unravels and you're left with a despondent employee base. Morale takes a long time to build, and it can take a day to evaporate. This reality in and of itself is a heavy anchor of stress.
Unless an acquisition is a life changing home-run for everyone involved (it seldom is), people start thinking about themselves. This is totally understandable and appropriate. Teammates spend years of energy investing in your company. They chose to join it and they chose to stay there. An acquisition is something that they do not choose, but you likely want them to continue along for the ride. I've seen a spectrum of reactions ranging from absolute euphoria to people lawyering up and insinuating or threatening to hold up a deal. Emotions run high for everyone involved and people process things their own way. David Weiden once told me that every team gets the jitters at the final yard line, and if you fail to make the play the game always unravels. Some of my strongest emotions in company building have taken place at these junctures. I've been both blown away by selflessness and astounded by selfishness. It's an experience that illuminates who you want to work with forever.
You learn (and feel) a lot at the finish line.