LOY & CO:

WHAT BUYERS AND SELLERS SEE—AND WHAT THEY SYSTEMATICALLY OVERLOOK



Markus Loy talks with Christoph Strömer about role-based thinking, errors in judgment, the “blind spot” and why culture is still missing from the M&A process.

For more than 35 years, Markus Loy has been involved in company acquisitions and sales in various roles: in companies, at banks and, today, as an independent M&A adviser. That experience shapes his perspective. He doesn’t theorize about M&A; he recognizes patterns: what drives buyers and sellers, where dynamics turn a process on its head, and why culture matters as

applies, but is rarely considered as an explicit decision-making dimension. That is precisely why it matters for the culture standard: Loy describes how M&A participants perceive the world—and shows where their “blind spots” lie.

THREE WORLDS, THREE DECISION-MAKING LOGICS

M&A isn’t all the same. Right from the start, Markus Loy makes it clear that sellers and buyers don’t operate within a single framework of rationality. Financial investors, family-business owners and corporations inhabit different worlds—not just in their objectives, but in the inner drama of how decisions are made.

Mr Loy, looking back at your projects, how are decisions in M&A really made—as opposed to how they’re described in public announcements?

First, we need to distinguish who we’re talking about. I basically see three worlds. First, traditional mid-sized businesses—business owners and family-owned companies. Second, strategic buyers, in other words corporations. And third, financial investors: funds, family offices, evergreen structures. These groups differ fundamentally in how they make decisions.

Financial investors are usually the most rational—because they have to be. They’re under enormous pressure to deploy capital, deliver performance and raise their next fund. As a result, they work very professionally and systematically. Rational doesn’t mean focused only on numbers. They understand that qualitative and strategic factors matter too. But they want the complete picture so they can ultimately generate returns on their capital. And they know exactly what they want and how to get it.

It’s different for business owners. Founders in particular are often making a life-changing decision when they sell. Work and private life are very often not truly separate; they overlap. Business is discussed at every meal, personal relationships are tied to it, and professional ones certainly are: identity and company are often fused. Accordingly, a sale isn’t a linear act so much as a process of coming to terms with the decision. Many people only make the real decision as the process unfolds—and then make it all over again, time and again.

And for heirs, there’s another factor: many feel as though they’re carrying a duty to their “ancestors” on their shoulders. It can be hard to break free from that. Sometimes there are financial difficulties, sometimes conflicts between branches of the family. But a clear desire to exit is relatively rare. Then there are the quasi-founders: people who inherited a business but went on to make it much bigger during their time at the helm. Their mindset is closer to that of a founder.

Corporations, by contrast, often appear rational—but internally they’re not infrequently highly political. I’ve seen more than once that incentives there are geared more towards avoiding risk than towards doing something properly.

Formalized at the top, politicized further down. Hierarchy does make things efficient once a decision has been made. But until then, a lot of political energy can be tied up in the system.

DIFFERENT ROLES, DIFFERENT REALITIES

Next, Loy breaks down the different perspectives. Owners, CEOs, CFOs, second-tier management and advisers are all looking at the same transaction—and yet they see something different.

When we look at the key roles—owner, CEO, CFO and management—what does each focus on?

On the buy side, owners or principals first focus on strategic and financial objectives: market position, acquiring technology, geographic expansion, downside risk and expected synergies. They rarely look at the “how.” That comes at the next level.

CEOs focus much more on feasibility—and on questions of power. What does this acquisition mean for my role? For the balance of power? For my next contract renewal? You also see things like the fear of a reverse takeover—the fear that the acquired company will ultimately take control of the buyer. An experienced CEO is almost always highly attuned to these kinds of shifts.

CFOs naturally focus more on financing and risks. They’re often more skeptical, sometimes more neutral, and generally less focused on power politics. Second-tier management, meanwhile, asks above all: What does this mean for me, my area, my opportunities? In the worst case, this can lead to “Not Invented Here” effects. People may recognize that an external solution could be better—but if introducing it would threaten their position within the existing system, they block it.

On the sell side, there’s another factor: reputation. The classic line is: “I want to be able to keep buying my rolls in town afterwards.” It can sound touching, and it doesn’t always hold true, but it gets to the heart of the matter: a life’s work, status, standing, continuity. And on the management side, the question often arises very early: What happens to me after the sale? That can give rise to some rather peculiar dynamics and quirks. Good M&A advice is therefore, above all, about recognizing these forces early and shaping the process so they don’t dominate it.

WHY SMART PEOPLE GET IT WRONG

The conversation takes a sharper turn here. Loy is describing not individual failures, but typical errors in the way a system thinks: sellers who overestimate their position, buyers who look too far inward, and professional players who, precisely because of their experience, overlook what will prove costly later. His perspective on the shift in power during the process is particularly compelling.

What mistakes in thinking do you keep seeing in M&A?

With inexperienced sellers, I keep seeing the same patterns: too much trust in familiar relationships, overestimating buyer interest, a lack of perspective-taking, and a significant underestimation of the process’s complexity. Many initially treat it almost like selling a used car—except here they’re dealing with highly professional negotiating partners and entirely different power dynamics.

Power dynamics are central here: at the beginning, the seller has everything; by the end, the buyer has most of the leverage. And the costs of walking away are not symmetrical. At a certain point, it becomes far more costly for the seller to pull out than for the buyer. That’s exactly why M&A advisers exist: I see my role as helping to mitigate this dynamic, at least to some extent.

On the buy side, I often see inexperienced buyers being far too introspective. Many mid-sized companies focus too much on what’s happening inside and far too little on what’s happening outside. If we show them a competitor looking for a new owner and they don’t even want to see the information memorandum, that’s remarkable. Some barely know their closest competitors—let alone seriously consider making an acquisition.

And what about experienced buyers? They have different biases. Private equity is highly professional in many respects, but it has blind spots too. A typical one is projecting its own incentive structure onto the people in a company. There’s a strong focus on incentives, without understanding that financial incentives are often more like hygiene factors: important, but not enough. Some genuinely believe that the right mechanisms can solve everything. That’s too mechanistic.

DEAL OR HORIZON?

This is at the heart of the conversation. Many transactions don’t fail at signing, but because of what happens afterwards. Loy shifts the focus from closing to what comes next—leadership, key people, collaboration and integration.

When transactions fail later on, what do you think is the reason?

Very often, it comes down to focusing too much on the deal—or closing—and too little on what happens afterwards. Many of the people involved focus very closely on this milestone, but fail to look towards the horizon.

Success is determined only after the acquisition! Ultimately, it comes down to questions like: Does the collaboration work? Is the company being led effectively? Do key people stay? I often talk about “walking assets”—the people who, if push comes to shove, can simply walk away.

Let me give you an example: we once had an extremely person-dependent company up for sale. The buyer didn’t have a single face-to-face conversation with the key person before the purchase. That wasn’t the only mistake, of course—but it was a red flag.

What helps in situations like this is a “deal captain”: someone who leads the deal for the owner while also keeping an eye on integration and taking responsibility for it. In complex situations, this is enormously important. Without someone in that role, things get very difficult. And the role must continue well beyond signing—for at least a year, and preferably longer. Because you have to manage portfolio companies, not just buy them.

In my view, this is the biggest blind spot for many potential buyers among German mid-sized companies: M&A still isn’t thought of enough as a strategic opportunity. M&A should really be a function like HR, procurement or accounting. Instead, a transaction simply “lands on their desk”—and the organization is often completely overwhelmed because it lacks the experience, resources and routines. That’s why, when assessing potential buyers, we look at three things: strategic fit, financial fit and decision-making capability. We assess that capability largely by whether a company has M&A experience and the right organization and people in place. If not, that’s a clear sign of what we might cautiously call a challenging process.

THE CULTURE BLIND SPOT

By this point, it’s clear why culture in M&A is so often invoked and so rarely addressed. Not because it doesn’t matter—quite the opposite. Rather, there’s still no clear, robust toolkit. Loy doesn’t describe culture as a soft, peripheral issue, but as the reality behind many integration problems—one that has yet to be systematically understood. That’s where Culture Due Diligence opens up a new space: not as a deal-breaker, but as a shift in perspective from the milestone to the ultimate goal.

Corporate culture, or the “cultural fit” between two companies, is considered essential in academic research, analyses and practice—although usually only in hindsight. Several studies, including those by Bain, show that around 70 percent of transactions fail to achieve their strategic objectives because ignoring cultural forces slows things down or even prevents strategic initiatives from having an impact. So why do corporate cultures still play hardly any role in the acquisition process?

I’ve been involved in M&A processes for over 30, 35 years. The process as a whole has become much more professional over that time. But even a classic HR Due Diligence is surprisingly rare. It starts with the questions: Who are the people I’m dealing with? Who are the key people? How capable is the management team? This area isn’t handled as professionally or systematically as other, supposedly harder areas of due diligence. And if HR Due Diligence is rare, culture even more so.

It’s not that people don’t value culture. It’s more that many see it as something nebulous—esoteric, voodoo, hard to measure, impossible to systematize. I don’t think that has to be the case. What’s missing, above all, is a toolkit and people with proven business experience who can really read and translate culture.

What would this kind of perspective need to deliver in practice to add value to the process?

Above all, it would need to deliver three things: an analysis, a picture of the fit, and an action plan. Something that makes visible how organizations really work, where they fit together, where tensions are likely to arise, and what to do about it. It would need to help the people involved understand earlier what will inevitably come into play later. Perhaps in collaboration with PMI specialists, too. Then the question wouldn’t be whether the deal should happen, but how it should be managed to give it a chance.

Bringing this additional perspective into an M&A process—in other words, a Culture Due Diligence—can seem to make the process more uncomfortable and complex at first. Why put yourself through it?

On the sell side, the instinctive reaction is probably: “Better not.” Anything that takes extra resources, brings more people into the process or increases confidentiality risks is seen as pretty uncool. Buyers and advisers feel much the same: anything that could make the transaction more complicated or increase the number of people involved is immediately treated with suspicion. Frankly, we want the deal to fly—to get done.

Your approach to Culture Due Diligence is particularly interesting because this kind of perspective doesn’t get in the way; it actually strengthens the case. You help everyone involved see earlier what will have an impact later anyway. That completely changes the role it plays. It becomes a shift in perspective: away from the deal as a milestone and towards the horizon.

As I said earlier, it’s not just “Will the transaction happen?” but “How should it be managed to give it a chance?” And that’s where things get interesting: if you make the people involved feel that you’re not preventing the deal but supporting it—by making the “how” clearer—you’ll get their support. These processes can get very heated.

In summary, I’m convinced culture will find its place in M&A. Private equity firms may even be the likeliest innovators here, simply because with buy-and-build they have no other choice. If you’re bringing companies together and aiming to build a growth story, you need more than deal mechanics. It’s no longer just about completing a successful transaction, but about achieving a successful integration and making sure values take hold.

EPILOGUE

What Markus Loy brings to light is more than a collection of typical deal mistakes.

He describes a decision-making system in which experience offers protection, but not from everything; roles provide direction, but can also create blind spots; and culture affects everything, yet is still rarely read systematically.

That’s precisely why his interview is more than an M&A analysis. It’s a message to decision-makers: anyone who buys, sells or integrates companies is responsible not just for a contract, but for the conditions that shape future collaboration.

Culture isn’t the soft side of a transaction—it’s often the harder reality after closing.