On September 23, 2026, People Inc. withdrew its proposal to acquire the MGM Resorts shares it did not already own after several months of negotiations. Its June proposal offered $48.30 per share in cash, and the contemplated transaction valued MGM at more than $18 billion. MGM announced that it would continue as a standalone company.
Large public-company transactions operate under rules and pressures that do not map perfectly onto the sale of a privately held Florida business. But one principle translates remarkably well:
A buyer should enter due diligence genuinely prepared to discover that it should not buy the company.
That sounds obvious. In practice, it becomes harder as a transaction progresses.
A deal can acquire momentum of its own
By the time a business acquisition reaches serious due diligence, the buyer may already have spent considerable money on attorneys, accountants, lenders, valuation work and other advisers.
Management has devoted hours to the transaction. Financing may be underway. Employees or family members may know about the proposed acquisition. The parties may have negotiated for months.
All of that creates psychological pressure to close.
But money already spent investigating a transaction is not a business reason to complete it.
The purpose of diligence is not to confirm the decision the buyer already made. It is to test that decision.
If the investigation uncovers weaker earnings quality, unexpected liabilities, excessive customer concentration, problematic contracts, uncertain intellectual-property ownership, regulatory concerns, employment issues or a business that depends much more heavily on its owner than expected, those discoveries should affect the transaction.
Sometimes they justify a purchase-price adjustment. Sometimes they can be addressed through representations, indemnification, escrow, seller financing or another structural solution.
Sometimes they change the investment thesis itself.
Before the purchase agreement, the LOI matters
Many privately held business acquisitions begin with a letter of intent, or LOI.
One of the most important questions at that stage is deceptively simple: What has actually become binding?
Florida contract law generally requires offer, acceptance, consideration and sufficiently definite essential terms before an enforceable contract exists. The Florida Supreme Court has identified those principles as basic requirements of contract formation. Justia Law
That becomes especially important with preliminary agreements.
In FI Real Estate Fund Two LP v. Donda, LLC, the Eleventh Circuit applied Florida law to an LOI that expressly described itself as otherwise nonbinding and contemplated further negotiation of a definitive purchase agreement. The court concluded that the LOI was an unenforceable agreement to agree because essential terms remained unresolved. Justia Law
The court emphasized that Florida law does not make every letter of intent categorically unenforceable. The issue is whether the parties actually reached agreement on sufficiently definite essential terms and intended to create enforceable obligations. Justia Law
That distinction matters enormously in M&A.
An LOI should make clear whether the proposed economic terms are binding or merely the basis for continued negotiations. It should also address the parties’ intentions concerning exclusivity, confidentiality, access to diligence materials, expenses and the circumstances under which negotiations may end.
A document called a “letter of intent” does not answer those questions by itself. The language does.
Due diligence should be capable of changing the deal
A buyer evaluating a Florida privately held company usually wants to understand far more than whether the business made money last year.
Financial diligence may reveal whether stated earnings are repeatable, whether owner add-backs are supportable, how working capital fluctuates and whether accounts receivable are actually collectible.
Legal diligence asks different questions.
Can important customer or vendor contracts be assigned following the transaction? Does a change in ownership trigger a consent right? Is there pending or threatened litigation? Does the company actually own the intellectual property on which it relies? Are key employees subject to agreements that matter after closing? Are corporate records consistent with the ownership the seller says is being sold?
For regulated businesses, licensing and compliance can become transaction issues of their own.
None of those questions exists merely to fill a diligence checklist.
They help answer the larger question: Is this still the company the buyer thought it was buying?
Price is only one response to new information
When diligence reveals a problem, parties often jump immediately to price.
Sometimes that is appropriate.
But M&A risk can be allocated in other ways.
A buyer concerned about whether future earnings will materialize may negotiate contingent consideration. A disputed liability may be addressed through an escrow or specific indemnification arrangement. Uncertainty about a key contract may become a closing condition. Seller financing can change how economic risk is shared between the parties.
The correct response depends on the particular risk.
A $100,000 reduction in purchase price does not necessarily solve a $100,000 problem if the real concern is that the problem could become $1 million.
Good deal structure asks not simply, “What is this risk worth?”
It also asks, “Who should bear it if it occurs?”
Signing the purchase agreement changes the analysis
There is an important difference between deciding not to proceed during preliminary negotiations and attempting to abandon a transaction after executing a definitive acquisition agreement.
Once a binding purchase agreement has been signed, the parties’ ability to terminate ordinarily depends heavily on the contract itself.
Acquisition agreements may contain financing conditions, required third-party consents, representations and warranties, pre-closing covenants, outside closing dates, termination provisions and other conditions that determine whether a party must close.
At that point, “I no longer like the deal” may not be a contractual exit.
For that reason, buyers should understand their termination rights before signing the definitive agreement, not after diligence produces an uncomfortable result.
The same is true for sellers. A seller who signs a deal with an uncertain buyer may later discover that financing contingencies, lender requirements or other closing conditions give the buyer substantially more flexibility than the seller expected.
Sellers should conduct diligence on buyers too
Most discussions of M&A diligence focus on the buyer investigating the company.
A seller has questions of its own.
How much equity is the buyer contributing? Is financing actually available? What conditions remain before the lender will fund? Is the seller expected to finance a meaningful portion of the price? Will that seller note be subordinate to senior debt? What assets or guarantees support repayment?
Those questions become particularly important when a seller will receive a substantial portion of the purchase price after closing.
The highest stated purchase price is not necessarily the best economic offer if a significant portion of it depends on future payment by an undercapitalized buyer.
Certainty of closing and certainty of payment have value too.
The ability to walk is part of negotiating leverage
Parties sometimes think of walking away as the opposite of negotiating.
It is actually part of negotiation.
A buyer who must own the company has limited leverage.
A seller who must close with this particular buyer has limited leverage.
That does not mean parties should casually abandon transactions. Most issues discovered in diligence can be analyzed, priced, allocated or solved.
But both sides benefit from knowing what would make the deal unacceptable before they reach that point.
For a buyer, that may involve maximum leverage, customer concentration, earnings assumptions or unresolved liabilities.
For a seller, it may involve minimum cash at closing, acceptable seller-financing exposure, personal guarantees, continuing employment obligations or closing certainty.
Those thresholds are easier to defend when they were identified before everyone became emotionally and financially invested in completing the transaction.
A transaction that does not close can still produce value
Not every abandoned acquisition represents wasted effort.
Sometimes diligence prevents a buyer from purchasing a company it misunderstood.
Sometimes negotiations show a seller that the proposed structure transfers too much risk.
Sometimes the process identifies problems that can be corrected before the business returns to market.
And sometimes the parties simply conclude that the economics no longer justify the transaction.
M&A advice is often described as helping clients “get deals done.”
That is only part of the job.
A well-run acquisition process should also help a client recognize the deal it should not do.