M&A Negotiating Tactic #1 – Honesty

Why Honesty is Your Greatest Asset in iGaming M&A Transactions

The ancient Greek storyteller Aesop wisely proclaimed that honesty is the best policy. In the high-stakes world of iGaming mergers and acquisitions, this timeless wisdom couldn’t be more relevant. As the online gambling industry races toward a projected valuation exceeding $150 billion by 2029, M&A activity continues accelerating, making transparency more crucial than ever for operators looking to exit successfully.

Understanding the iGaming M&A Landscape in 2025

The iGaming industry is experiencing unprecedented consolidation and strategic partnership activity. According to recent industry analysis, mergers and acquisitions have become a dominant trend in business development, enabling operators to enter new markets, acquire cutting-edge technologies, and expand product portfolios rapidly. The online gambling market, valued at $93.26 billion at the close of 2024, presents lucrative opportunities for both buyers seeking growth and sellers looking to capitalize on their built equity.

Strategic partnerships and acquisitions serve multiple purposes in today’s iGaming ecosystem. Operators leverage M&A to access regulated markets across North America, Europe, Latin America, and emerging African territories. Technology acquisitions have proven particularly valuable, with artificial intelligence, blockchain integration, and mobile gaming platforms commanding premium valuations. The fragmented regulatory landscape across jurisdictions makes established operators with multiple licenses especially attractive acquisition targets.

For iGaming business owners considering an exit, understanding current market dynamics is essential. Blockchain gaming accounted for 40% of total investment deals in 2024, while mobile gaming, live casino offerings, and eSports betting continue attracting significant capital investment. Operators with strong fundamentals in these segments, combined with transparent operations and clean compliance records, position themselves advantageously for favorable acquisition terms.

Why Honesty Forms the Foundation of Successful iGaming Exits

Trust forms the bedrock of every successful iGaming business sale. For potential buyers evaluating online gambling operations, acquiring any business carries inherent risk—but in the highly regulated iGaming space, that risk multiplies significantly. Licensing complications, regulatory compliance issues, payment processing challenges, and jurisdiction-specific restrictions create additional layers of complexity that buyers must navigate carefully.

The perceived risk in an iGaming M&A transaction directly impacts business valuation. When buyers doubt a seller’s integrity or suspect undisclosed liabilities, they implement protective measures that can significantly alter transaction economics. These protective strategies might include strengthening representations and warranties in purchase agreements, structuring substantial portions of the purchase price as earnouts or promissory notes potentially subject to setoff rights, extending the depth and duration of due diligence investigations, negotiating lower purchase prices through re-trading tactics, requesting extensive credit reports and background checks on the business and its operators, or altering critical transaction terms such as seeking permission to contact key customers, affiliate partners, or employees even when initially agreeing not to make such contacts.

In the iGaming M&A arena, honesty transcends mere ethical consideration—it becomes your ultimate strategic advantage. Transparency enables you to build genuine trust with potential buyers, maximize your business valuation, accelerate transaction timelines, and facilitate smoother negotiations from letter of intent through closing.

The Real Cost of Concealment in iGaming Transactions

Attempting to hide material facts during an iGaming business sale is not only unethical but practically futile. The extensive nature of M&A processes, coupled with sophisticated buyer due diligence, makes successfully concealing significant information nearly impossible. Experienced buyers and their advisory teams conduct thorough investigations covering financial records, player data analytics, regulatory compliance history, payment processing relationships, software licensing agreements, affiliate network structures, and operational metrics.

When buyers inevitably uncover undisclosed information during due diligence, the consequences extend far beyond simple embarrassment. Discovery of concealed facts typically triggers immediate re-trading discussions, often resulting in significantly reduced purchase prices. Buyers may introduce onerous escrow arrangements, extend earnout periods, or implement complex clawback provisions. In worst-case scenarios, buyers simply walk away entirely, leaving sellers to restart their exit process with a tarnished reputation in a relatively small, interconnected industry.

How Transparency Reduces Perceived Risk and Increases Business Value

Honesty plays a pivotal role in diminishing buyer risk perception, directly translating to higher business valuations. But how exactly do buyers evaluate risk in iGaming M&A transactions? They employ a sophisticated blend of legal review, financial analysis, operational due diligence, and critically, their instinctive assessment of the seller’s trustworthiness.

Your transparent approach to presenting your iGaming operation can reduce perceived risk across multiple dimensions. Regulatory risk diminishes when you proactively disclose all licensing situations, compliance incidents, or ongoing regulatory discussions. Financial risk decreases when you voluntarily explain revenue fluctuations, player acquisition cost trends, or seasonal patterns in betting behavior. Operational risk reduces when you openly discuss key personnel dependencies, critical vendor relationships, or technology infrastructure limitations.

Consider a practical example from the sports betting sector: An operator with a player database of 150,000 active users might face questions about player acquisition costs (PAC) and lifetime value (LTV) ratios. A transparent seller provides detailed cohort analysis showing PAC trends over 24 months, broken down by acquisition channel, geographic market, and customer segment. They voluntarily explain that while PAC increased 18% year-over-year due to increased competition in their primary market, LTV simultaneously improved 23% due to enhanced retention strategies and cross-selling of casino products. This honest, data-driven presentation builds confidence far more effectively than simply touting user growth figures without context.

Understanding Different Buyer Types in iGaming M&A

The iGaming M&A market attracts diverse buyer profiles, each evaluating risk through different lenses. Understanding these buyer types enables you to calibrate your communication approach while maintaining unwavering honesty.

First-Time iGaming Entrepreneurs

Individuals entering the online gambling industry for the first time often bring capital but limited operational experience. These buyers heavily rely on gut instinct and can be easily spooked by any hint of untrustworthiness. They need extensive education about industry norms, regulatory requirements, and operational realities. For these buyers, complete transparency combined with patient explanations builds the confidence necessary to move forward. Any detected dishonesty will typically send first-time buyers running, regardless of the business’s fundamental quality.

Experienced iGaming Operators

Established operators pursuing acquisitions for market expansion or portfolio diversification bring sophisticated understanding of the industry. While more open to calculated risks, these buyers possess finely tuned instincts for detecting seller misrepresentations. They’ve likely participated in multiple transactions and understand common areas where sellers attempt to obscure problems. If they sense anything less than complete forthrightness, they’ll introduce protective safeguards in the purchase agreement, structure earnouts to shift risk, or inundate you with exhaustive due diligence requests that slow the transaction and increase costs.

Financial Buyers and Private Equity Firms

Financial buyers represent the most sophisticated buyer category in iGaming M&A. Having completed numerous transactions across various industries, these buyers excel at character assessment and detecting inconsistencies. They employ experienced deal teams who’ve seen every seller tactic and recognize red flags immediately. Financial buyers approach due diligence systematically, cross-referencing information across multiple sources and testing the consistency of seller representations. Any discrepancy, however minor, triggers deeper investigation.

Interestingly, while financial buyers are the most difficult to deceive, they often move fastest when they trust a seller. A private equity firm that gains confidence in management integrity may streamline due diligence significantly, accepting management representations more readily and negotiating terms more favorably for sellers.

Strategic Disclosure: When and How to Share Critical Information

Strategic disclosure doesn’t mean dumping all information on potential buyers immediately—it means thoughtfully revealing material facts at appropriate stages while ensuring nothing significant remains hidden. In iGaming M&A, certain disclosure strategies prove particularly effective.

Voluntary Early Disclosure of Material Facts

Proactively disclosing material facts early in the relationship provides crucial advantages. This approach allows you to frame issues on your own terms, present context and mitigation strategies, and demonstrate transparency that builds trust. Taking this proactive stance empowers you to control the narrative rather than adopting a defensive posture after buyers discover issues independently.

Consider practical examples relevant to iGaming operations. If your casino platform experienced a security incident 18 months ago, voluntarily disclose it during early discussions. Explain what happened, detail the immediate response and remediation measures implemented, describe enhanced security protocols adopted afterward, and show documentation of zero similar incidents since implementation. This proactive disclosure demonstrates maturity and risk management capability far more effectively than having buyers discover the incident through their own due diligence.

Similarly, if a key licensing jurisdiction has ongoing discussions about regulatory changes that might impact your operations, address this proactively. Provide context about the proposed changes, analysis of potential impacts on your business, preliminary strategies for adaptation, and industry association efforts to shape the regulatory outcome. This demonstrates you’re ahead of the curve rather than caught unaware.

Anticipating Buyer Questions and Preemptive Disclosure

Experienced iGaming M&A advisors can predict buyer questions with remarkable accuracy. By anticipating these questions and addressing them before being asked, you accomplish two critical objectives: presenting information in your own terms with appropriate context, and fostering deep trust by demonstrating you’re not hiding anything.

If a buyer discovers significant facts before you reveal them, rebuilding that lost trust can take weeks or months—if it’s possible at all. In the fast-paced iGaming M&A market where multiple buyers often compete for attractive assets, any loss of trust might mean losing the deal entirely.

The Danger of Hype in iGaming Business Sales

The temptation to hype your iGaming operation during sale discussions can be overwhelming, especially when you’ve invested years building the business and believe deeply in its potential. However, exaggeration and boasting represent among the most counterproductive approaches in M&A discussions.

Let the Data Speak: Building Credibility Through Third-Party Sources

Rather than making grandiose claims about industry trends or your business’s positioning, leverage credible third-party sources. If you want to demonstrate positive industry trends, research and cite reports from established analysts like H2 Gambling Capital, industry publications like iGB, consulting firms like SOFTSWISS, or regulatory bodies and gaming commissions. Present these sources to buyers with appropriate caveats when warranted.

For example, rather than proclaiming “The iGaming market is exploding and we’re perfectly positioned to capture it,” consider this approach: “According to the latest SOFTSWISS iGaming Trends report, the online gambling market is projected to reach $150 billion by 2029, with mobile gaming and live casino showing particularly strong growth. Our platform has emphasized these segments since 2022, and you can see in our analytics that 73% of our gross gaming revenue now comes from mobile play, up from 51% two years ago. The industry data suggests this trend will continue, though we remain cautious about saturation in our primary markets.”

This approach accomplishes multiple objectives simultaneously: attributing market optimism to credible sources rather than appearing as your opinion, providing specific data about your business’s alignment with trends, demonstrating awareness of potential limitations, and inviting the buyer to draw their own conclusions.

Plant Seeds, Don’t Force Conclusions

Rather than force-feeding your projections and assumptions to buyers, provide raw data and allow them to construct their own narratives. Their self-generated conclusions will always carry more weight than any projections you present. This psychological principle proves especially powerful in iGaming M&A discussions.

Consider how you might discuss a new product or market opportunity. Instead of stating: “If we launch our new live dealer poker offering in the Brazilian market, it will generate $8 million in annual revenue,” try building toward this conclusion through guided questioning:

“We’re examining opportunities in the Brazilian market. The recent regulatory changes there have opened significant possibilities. According to the Brazilian Gaming Institute, there are approximately 12 million active online gambling participants in Brazil, with poker showing particular strength. We’re considering pricing our live dealer poker at around $2 average stake per hand. Industry benchmarks from similar Latin American markets suggest monthly active user engagement rates around 25% for live dealer products, though that varies considerably by operator quality and marketing effectiveness. Obviously, market penetration would start low—probably 0.5% to 1% in year one—but could scale meaningfully if our product delivers strong player experience.”

Notice how this approach differs fundamentally from directly stating a revenue projection. You’re providing the ingredients—market size, pricing strategy, engagement benchmarks, penetration assumptions—and allowing the buyer to calculate possibilities themselves. When they run these numbers (12 million participants × 0.75% penetration × 25% MAU engagement × $2 stake × estimated hands per active user), they arrive at revenue projections that feel like their own analysis rather than your selling pitch.

Two Contrasting Approaches: A Practical Example

Consider how two different sellers might respond to common buyer questions during an iGaming business sale:

Question: “What was your gross gaming revenue last year?”

Straightforward Seller: “We generated $7.3 million in GGR, representing 19% growth over the prior year. We can provide detailed monthly breakdowns and explain the factors driving growth in each vertical.”

Evasive Seller: “Well, you shouldn’t focus too heavily on reported numbers. There’s substantial additional cash flow in the business if you understand what I mean (wink, wink). The real story is our player engagement metrics and brand strength—those tell the true picture.”

Question: “Who are your primary competitors?”

Straightforward Seller: “In our core markets, we primarily compete with BetCompetitor and GamingRival. They’re both strong operators—BetCompetitor has excellent brand recognition and player loyalty, while GamingRival offers very competitive bonus structures. However, we believe our differentiation comes from our proprietary player retention system and superior customer service. Our net promoter score of 68 significantly exceeds the industry average of 45, and our 90-day player retention rate of 34% outperforms typical benchmarks of 22-25%. These advantages have helped us grow market share despite facing well-funded competitors.”

Evasive Seller: “Honestly, we don’t really have significant competitors. We’ve carved out a unique niche, and nobody does what we do quite the way we do it.”

As a buyer, which seller inspires more confidence? Whose business would you feel comfortable paying a premium multiple to acquire? Transparency and specificity invariably generate more trust and command better valuations than vague boasting or evasive responses.

Building Trust Through Data-Driven Presentations

In the iGaming industry, data reigns supreme. Operators live and die by metrics—player acquisition costs, lifetime value, gross gaming revenue, net gaming revenue, active user statistics, churn rates, bonus abuse patterns, payment processing success rates, and countless other KPIs. Sophisticated buyers expect to see this data presented clearly, honestly, and with appropriate context.

Focus on Building Strong Relationships

Prioritizing relationship building can significantly streamline the entire M&A transaction process. Understanding that each buyer may have varying perspectives on the relationship’s significance allows you to adjust your approach accordingly. Some buyers prefer highly professional, arms-length transactions, while others value personal connection and cultural alignment.

In the relatively small iGaming community, reputation matters enormously. Word travels quickly about sellers who operate with integrity versus those who play games during transactions. This reputation can impact not just your current sale process but any future involvement in the industry.

Present Both Strengths and Weaknesses

Highlighting favorable aspects of your iGaming business is appropriate and expected—buyers want to understand what they’re acquiring. However, providing a balanced presentation that acknowledges weaknesses and challenges demonstrates maturity and realism. As an entrepreneur, optimism comes naturally, but complementing it with honest assessment proves far more effective in M&A discussions.

For instance, you might present: “Our sports betting vertical has shown exceptional growth, with 45% year-over-year increase in handle. However, I should note that our casino vertical has underperformed expectations, growing only 8% during the same period. We believe this is primarily due to limited game selection—we currently offer about 450 casino games compared to competitors offering 1,200+. We’ve identified partnerships with three additional game providers that could address this gap, and preliminary discussions suggest implementation could occur within 90 days of closing. However, these are relationships we haven’t finalized, so there’s execution risk. The buyer would need to evaluate whether to pursue this strategy or take a different approach.”

This balanced presentation accomplishes several objectives: demonstrates honest self-assessment, provides context for underperformance, suggests potential solutions without overselling them, acknowledges execution risks, and respects the buyer’s decision-making authority.

Best Practices for Written vs. Oral Communication

In iGaming M&A transactions, understanding the distinction between written and oral communication proves critical. Anything committed to writing potentially becomes evidence in future disputes, particularly if business performance post-closing falls short of expectations or if material misstatements emerge.

The Confidential Information Memorandum (CIM)

Your confidential information memorandum represents the primary written document marketing your iGaming business to potential buyers. This document should provide meticulous analysis of your business and industry, containing definitive statements about current industry status, your competitive position, and growth prospects—but all grounded in verifiable facts and supported by credible sources.

The CIM undergoes thorough scrutiny and refinement by your advisory team, including your M&A advisor, attorney, accountant, and other professionals before sharing with potential buyers. Every statement in the CIM should be defensible and verifiable. If you want to express optimism or discuss potential opportunities, do so verbally during meetings where context and nuance can be conveyed more effectively.

Email and Written Correspondence Guidelines

When communicating via email or other written formats during the transaction process, adhere strictly to facts. Avoid speculative statements, unsupported projections, or subjective opinions that might be misconstrued or taken out of context. If buyers pose questions requiring nuanced answers, suggest a phone call or video conference rather than attempting to address complexity in writing.

For example, if a buyer emails asking about plans for geographic expansion, rather than writing an extensive email speculating about opportunities in various jurisdictions, respond with: “That’s an excellent question with several considerations around licensing requirements, market dynamics, and capital allocation. Would you have 30 minutes this week for a call where we can discuss our strategic thinking on geographic expansion? I can prepare some materials showing preliminary analysis of various markets we’ve evaluated.”

This approach allows you to discuss opportunities conversationally, gauge buyer reactions and interest, adapt your presentation based on buyer priorities, and avoid creating written records of speculative discussions that might later be misconstrued.

Post-Closing Considerations and Warranty Protection

Many sellers mistakenly believe their obligations end at closing. In reality, your exposure through representations and warranties typically extends for 12 to 36 months post-closing, sometimes longer for specific issues like tax matters or intellectual property concerns.

Understanding Representations and Warranties in iGaming M&A

Purchase agreements in iGaming M&A transactions contain extensive representations and warranties covering regulatory compliance and licensing, financial statement accuracy, player fund segregation and trust account management, software licensing and intellectual property rights, affiliate agreement validity and commission obligations, payment processing relationships and reserve requirements, employee and contractor agreements, tax compliance across all operating jurisdictions, absence of undisclosed liabilities, and compliance with anti-money laundering and responsible gaming requirements.

If buyers discover material misstatements after closing, they can pursue damages based on the representations and warranties you provided in the purchase agreement. More concerning, they might offset any payments still owed to you—such as earnout payments or deferred purchase price—through setoff provisions. In egregious cases involving intentional fraud, legal consequences can extend well beyond financial damages.

The Extended Relationship

In many iGaming M&A transactions, sellers maintain involvement post-closing through transition services agreements, consulting arrangements, earnout structures requiring ongoing performance, or simply remaining in the industry and encountering the buyer in professional contexts. Building trust through honesty during the sale process establishes a foundation for positive post-closing relationships. Conversely, buyers who feel deceived during the transaction will approach the post-closing relationship with suspicion and hostility.

Consider that it’s far easier to negotiate with someone who trusts you than with someone who views you as adversarial. When earnout calculations require interpretation of ambiguous provisions, or when unexpected situations require buyer and seller to work together post-closing, the trust built during the transaction proves invaluable.

Be Cautious with Unscrupulous Buyers

While this article emphasizes seller honesty, buyers don’t all operate with equal integrity. Some employ aggressive tactics designed to exploit seller transparency. Adapting your communication style based on buyer behavior is appropriate—maintaining honesty while becoming more guarded about volunteering information beyond what’s legally required.

If you’re unfamiliar with M&A negotiations in the iGaming space, engaging an experienced advisor becomes crucial. Seasoned advisors can discern when buyers are being appropriately diligent versus attempting to exploit sellers, when to adjust your approach to match buyer tactics, when to stand firm on positions, and when buyer behavior suggests walking away is the wisest course.

Some buyers employ win-at-all-costs strategies, making their aggressiveness evident through constant re-trading, unreasonable demands, or shifting positions after terms are agreed. Others take more subtle approaches, concealing true intentions while leveraging your honesty to extract maximum advantage. In these situations, maintaining honest, firm, and professional positions is essential. If you lack experience navigating these dynamics, professional advisory becomes even more critical.

Key Takeaways for iGaming Operators

As the iGaming industry continues its rapid evolution toward projected valuations exceeding $150 billion by 2029, M&A activity will remain a defining feature of the landscape. Operators considering exits must understand that honesty transcends mere ethical obligation—it represents a powerful strategic tool for maximizing business value and facilitating successful transactions.

The core principles bear repeating: transparency reduces buyer risk perception and directly increases your business valuation; honest operators save time and stress by avoiding the complexity of maintaining inconsistent stories; attempting to conceal material facts in today’s M&A environment is practically impossible and almost always backfires; representations and warranties create long-term exposure that extends well beyond closing; and trust built through honesty makes every aspect of the transaction smoother, from due diligence through post-closing integration.

The iGaming M&A market rewards operators who demonstrate strong fundamentals, regulatory compliance, and transparent operations. Whether you’re considering an exit in the next 12 months or simply planning for eventual succession, building a culture of transparency and honest communication throughout your organization creates value that will be reflected in your ultimate transaction.

Next Steps for iGaming Operators

If you’re contemplating an M&A transaction for your iGaming business, consider taking these practical steps. Begin with an honest internal assessment of your business’s strengths and weaknesses. Engage with experienced iGaming M&A advisors who understand the unique dynamics of online gambling transactions. Invest in organizing financial records, compliance documentation, and operational data that will be scrutinized during due diligence. Address any known issues proactively rather than hoping buyers won’t discover them. Consider commissioning an independent business valuation to understand your realistic market value. Research recent comparable transactions in your segment of the iGaming industry to understand current market conditions and valuation multiples.

Remember that Aesop’s ancient wisdom about honesty being the best policy wasn’t just moral guidance—it was practical advice for achieving success. In the complex, high-stakes world of iGaming mergers and acquisitions, honesty remains your greatest strategic asset. Use it wisely, and you’ll maximize both the financial and relational outcomes of your transaction.