Selling your business without assistance from a skilled M&A advisor is almost always a bad idea. The skill and experience of an advisor whose business it is to sell companies ensures that owners don’t go into the process poorly prepared or naive. Every sales process brings rough patches and challenges. A skilled advisor helps you navigate these difficulties, securing a successful outcome. These services cost money, of course, but the return on this investment is typically very high. Considering the complexity and number of tasks an M&A advisor undertakes, and the extent to which such a professional can free your mind and reduce your workload, this is money well spent.
Choosing the Right M&A Advisor
Sellers must carefully examine their advisor’s previous experience, competence, and reputation before engaging their services. Seek a track record of excellent previous deals, exemplary testimonials from clients, a few references, and a strong reputation among other professionals. The more recently the advisor has worked in the same industry as your business, the better, as this typically indicates strong relationships with potential buyers.
The Advisor’s Role at Each Stage of the Process
It takes a lot of work to prepare the target market for a pitch. Clean financial records are critical. Even when financials are accurate, they may have missing components, such as narratives or business plans. Your financial statements must be audited, and adjusted if the company has previously been used to pay owner expenses. These are tasks the M&A advisor can help with.
Beyond mere financials, the advisor will also ensure that any physical aspects to the company, such as locations or buildings, are diligently maintained. The advisor may inspect the facility, and send a checklist of items that need work. The advisor will also get key customers, suppliers, and other actors on board for the sale, since this can greatly affect value.
Going to Market
The most visible part of the process is when the advisor puts the company on the market. They will choose the route that optimizes chances for success. That often involves a process of contacting, vetting, and negotiating with potential buyers. A good advisor should be able to efficiently manage this process, including by checking buyer qualifications based on the advisor’s expertise and knowledge.
An advisor will also determine whether it is better to show the property to just a few potential buyers, or take a broader approach. This depends on factors such as special features of the business and time constraints. No two sales processes are identical, and therefore each transaction requires a different approach.
Whether approaching a large group of buyers or just a few, the M&A advisor will prepare a confidential information memorandum (CIM), sometimes known as a pitch boo, that provides significant details about the company.
Closing the Deal
In the end, a seller can be confident that the buyer can help with negotiation of the deal, including its currencies, structure, escrow payments, reserves, and other key features. If the deal requires contingent payments, the advisor can help guide these decisions. When non-price considerations are relevant, the advisor can formalize these elements, too. Each sale may be different, but the value of an M&A advisor remains remarkably consistent across many deal types.