Deals occur in a range of fairness-or get dragged there after the fact

Source: Anthony
The range of fairness is bounded by the two parties perception of value. During the negotiation, both parties attempt to drag the other to their viewpoint. If the valuations overlap, the deal will occur in that intersected space.  If the deal is done outside that range of fairness, which can occur driven by deal momentum or third party interests, then the party who feels cheated will often drag the deal into that range of fairness after the fact by distroying value. Consider the following simple examples:

• A buyer & seller agree to terms on a house purchase. Post-inspection, the buyer negotiates a price reduction and the seller complies because the reduction is less than the overall cost to remarket the house. Seller reduces the value of the house to the buyer by bad-mouthing the buyer to buyer's new neighbors and removing items that Seller would have otherwise left.
• Platform company Buyer reneges on an earnout, seller of platform company lets a virtually completed tuck in acquisition slide, reducing the potential value of the business then bad mouths Buyer to other Industry participants, driving up cost of and slimming pool of other tuck-ins.

The converse can also also true: investment banks and consulting companies routinely overpay their new junior hires as they know the hirees know they are being overpaid relative to their value to any other Industry and hence work their butts off.