Some recent transactions have reminded me that many hostage taking moments arise while selling a company. Sellers can either proactively manage these risks or passively hope kismet kicks in. Buyers view them at best as a breach of trust and at worst they kill the deal (or enable retrading). For those who don’t like surprises, here’s how to handle three common challenges that can hijack a deal (and frankly how to handle other such surprises):

Exorcising Demons. Every business has cobwebs, challenges that a buyer will end up having to address. While the purchase agreement forces disclosure of issues such as employment claims, disgruntled customers, financial issues, the question is really when and how to best communicate bad news to a buyer. You’d be amazed at the percentage of sellers who would prefer wait to the last moment. As a seller, you’re calculating whether bad news will influence the buyer’s valuation or terms. Experience shows the earlier the disclosure the better, sometimes you’re better off disclosing before you’re in exclusivity with a buyer and use the presence of other suitors to keep everyone engaged while working through the impact. Usually the issue is not so material that you have to worry about them walking away, but if you spring it on a buyer late in negotiations you certainly will find a reset. The key is to package the problem and, if possible, have a solution.

Customer Extortion. Customer concentration, where the seller relies on a limited number of customers for the bulk of its revenues, always affects the pricing discussion. Such customers also present a delayed risk – whether they will renegotiate their relationship. Key customers will be contacted by the buyer during diligence to confirm their relationship, and some will view this moment as an opportunity to extract new terms or more problematically as an opportunity to leave. Don’t be fooled if you think you have a contractual right to assign their relationship; customers you think you can assign may signal otherwise – and impact the deal. Maintaining a solid pulse on key customers, ensuring that their relationship manager stays close (and remains unflappable once the deal is announced), and managing how the buyer first engages with them are critical.

Employees Grabbing the Keys. “Our employees are our most important asset.” And they can also be the greatest threat to getting your deal done, depending on how critical they are and how long their recognition has been ignored. Inevitably, some of the last relationships to be negotiated with the buyer are those with these key employees. They know the deal is happening; they’ve been told how important they are, but they have no idea how their compensation, employment, or role will change. By the time they’re approached, they’re feeling disengaged. Don’t think that some retention plan, stock restriction or noncompete will keep them from revolting. In fact, the less they’ve felt fairly treated by the seller, the more likely they will collectively balk or walk. The reality is that if you’re late in addressing these concerns you can buy some degree of loyalty – the question is who is going to pay for it; the later in a deal, the more likely it’s out of the seller…

The irony with how deals get hijacked is that the culprit usually is the entrepreneur even if acting on the “advice” of others. These are avoidable risks. One has to resist the instinct to hide or delay or spin. Few deals sail through unscathed by such surprises.

With more than 30 years’ experience in law and business, Newt Fowler, a partner in Womble Bond Dickinson’s business practice, advises many investors, entrepreneurs and technology companies, guiding them through all aspects of business planning, financing transactions, technology commercialization and M&A. He’s the past board chair of TEDCO and serves on the Board of the Economic Alliance of Greater Baltimore. Newt can be reached at newt.fowler@wbd-us.com.