by Scott Bushkie. CBI, M&AMI
Let’s say you think your contractor is cheating you. Do you hire an investigator or do you do the research yourself? When it comes to hiring an M&A advisor, I want the guy (or gal) who does the research himself.
With the new year upon us, we’re looking at our HR needs. As I think about bringing new advisors onto my team, I started thinking about the skills and traits a business owner should be looking for when hiring an M&A advisor.
For me, I want someone with curiosity. I want someone who, given the right tools and resources, gets excited about taking the time and energy to really find the best buyers for a particular client. I need someone who’s not afraid to cold call and network, has social skills, but can also sit down and coordinate a project, do the necessary research, and understand financials.
Here’s my top six criteria I think you should look for in an M&A advisor:
Ethics. If they don’t do what they say they’re going to do, you’ll have a frustrating experience as a seller. Thanks to the internet, disreputable business people have fewer places to hide. Check the referrals of the advisor you are interested in.
Sales Skills. This is a sales job. They need an outgoing personality, presentation skills, and some solid negotiation abilities. But they also need the discipline to know when to say no, so they don’t over-promise and under-deliver. And in my company, at least, that particular skill is mandatory.
Financial Acumen. A good advisor can’t be all sales and no substance. They need to understand business and what makes it move. They have to understand financials, including how to recast the numbers to show normalized EBITDA and understand the corresponding balance sheet.
Project Management Skills. “Selling” any deal is less than half the battle. The real test of an advisor’s skills is the ability to usher the project through to completion. And that means creating a project plan, watching deadlines, and being willing to hold other professionals accountable to meeting those deadlines, including you the client.
Results- Oriented. Working in M&A is a performance-based position. Unlike salaried professionals, they don’t make the success fee until you are successful.
Leadership. In M&A, being a leader means setting clear expectations with sellers and buyers. This is no place for a yes-man. They need to be comfortable having tough conversations to bring people back to reality and protect them from themselves from time to time. As a seller you will appreciate this quality during the ups and downs of negotiations.
I’ve seen plenty of people who tried M&A and haven’t worked out, both here at Cornerstone and around the country. These professionals are typically really good in one area but deficient in another.
I’ve seen advisors who are very social, but afraid to have the tough conversations. I’ve seen people who are very smart, but try to dabble in the industry part-time. And I’ve seen people who think they’re smarter than everyone else and try to go through the process showing off those smarts rather than truly leading and collaborating with others.
The biggest reason we’ve been able to make it for 15 years is our ability to say no more than yes. We pass on a lot of marginal clients that we think either aren’t saleable, have unrealistic value expectations or aren’t a good fit for the niche we serve. There are too many players in this industry who say yes to anything and spend more time chasing the next deal than delivering actual results. Choose your advisor carefully.