There seems to be a growing belief amongst buyers of mid-market companies that deal delays are simply commonplace, and more of a neutral impact on the deal than anything else. A belief that a deal which takes nine months instead of four is simply slower, not worse. Put simply, that the clock is just a clock and the deal gets done when it gets done.

This belief is wrong.

In a transaction, time is not a neutral medium that value passes through unchanged. Time has a direction. And that direction runs against the seller nearly every time. Smart sellers understand this.

I want to make the financial case for why, because once you see a deal the way you would see a position on a stock trade, the urgency stops feeling like impatience to get a deal done and starts looking like what it actually is... risk management.

From the founder's perspective, the day the LOI is signed they think they have agreed to sell their company for a set price at a set time. What they have really done is write the buyer an option. The buyer now holds the right, but not the obligation, to buy the seller's business at a price struck today, exercisable at some point in the future, after they have looked under every nook and cranny until they are satisfied. The seller thereby becomes the short on that option. And like anyone who holds a short position, the seller is now exposed to two things they do not control: time and volatility.

Take time first. The option the seller wrote has a decay built into it, except it works backwards from the way options work in public markets. In the market, the seller of an option earns the time decay. In a mid-market M&A deal, the founder pays it. Every week the transaction stays open, the seller's dataset ages... think due diligence folders and the sub-information beneath them. The financials that supported the price grow stale. Eventually the buyer is entitled to refreshed numbers, and if the business has softened even seasonally, the seller has handed them a reason to attempt to re-trade the deal. The working capital peg drifts. The trailing earnings base drifts. None of this requires bad faith from the buyer. It only requires a calendar.

And the opposite is just as dangerous. If the company exceeds its performance expectations while the deal sits open, the founder is held to a transaction value anchored to a threshold the business has already outgrown, in effect offering the buyer a discount. A loss for the seller and a big win for the buyer.

Recently, we had a deal collapse that proved the point. Our client, the seller, was five months into due diligence with no real end in sight when they onboarded a game-changing client, one capable of nearly doubling the company's EBITDA. That forced an attempt to re-establish the deal against the new performance profile of the business, and it opened a transaction value chasm that could not be bridged. The deal died after nearly seven months under LOI. If the buyer had moved quicker, it would have closed, and all of that incremental value would have been theirs. Instead, their delay cost them both the upside and the deal itself.

Next, there is the asymmetry that almost no seller prices correctly: what happens to the seller's alternatives while the deal is open.

The day the founder signs the LOI, they start spending down their own optionality. They tell themselves it is done. They quietly tell a few key people. They stop running the business like an owner who fully intends to keep it... they let the contract that would not close before the sale slide, they defer the hire, they manage for the handover instead of the next decade. The buyer has done none of this. Their pipeline is intact. They are still looking at other targets. So with every week that passes, the buyer's best alternative to the deal quietly improves while the seller's quietly erodes. In the language we would use on any other position: the seller is short time and short optionality, and the party across the table is long both. That gap widens, in the buyer's favour, for free.

Now remember the second thing a seller is exposed to when they are short an option. Volatility. An open deal is a short volatility position on a basket of outcomes the seller cannot control. A rate move. A soft quarter. A customer concentration the seller knew about and hoped to clear before closing. A key person's health. A wobble in the buyer's own financing. For the entire time the deal is open, the founder carries all of it. The longer it stays open, the more of that exposure they have bought. They are not waiting out the risk... they are accumulating it.

If those three forces simply added up, delay would be expensive but manageable. The reason it is dangerous is that they do not add. They multiply.

This is the part the usual "delays kill deals" advice never reaches, because it treats a delay as something passive, a risk sitting quietly in the corner. It is not passive. It is reflexive. Distraction during the due diligence process softens the business. The softening invites the re-trade. The re-trade breeds friction. Friction breeds more delay. More delay deepens the distraction. Each turn of that loop feeds the next, and somewhere in the middle the deal stops being a transaction and becomes a slow negotiation about why it is taking so long... and then about why it no longer makes sense for the buyer, the seller, or both.

So when we push a mid-market process to move at a pace that closes clean and precise in four months rather than six... it is not temperament. It is that we can see the position, and the risk. Speed in a deal is not haste. It is the cheapest hedge available to the seller, and most of the time it is the only one fully within their control.

The practical version is simple. The seller should have the data room built before the process goes to market, move fast on every information demand, and never be the reason the flow slows. The advisor's job is to quarterback the process, to anticipate issues and information demands before they become live, and to keep pushing every party forward along the path. And the buyer's job is to honour their commitments and to recognize that delay in diligence and closing carries a cost... not only for the seller, but, as often as not, for the buyer too.

Reece Tomlinson is the Founder and CEO of RWT Capital Corp. and the author of Uncommon Capital.

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