An Investment Banker can transform a sale from a confusing, frustrating process into a streamlined and lucrative undertaking. But not all investment bankers are the same. Before hiring an M&A Advisor, you must get to know them better, and ensure that they will be a good partner for you during the sale process. These four questions can offer a window into your advisor’s mind, as well as important insights about what you can expect from the sale.
How much experience do you have?
You need an investment banker with a defined and well-supported resume. Don’t just look for experience. You also want to see that your investment banker has successfully sold businesses, rather than merely worked with them. Even more important is to seek an investment banker with experience in your niche.
How do you assess value?
No matter what industry they serve, a good investment baker has clear metrics for assessing value. They must also know how to ensure that their valuation is tailored to your specific business. An accurate valuation is a key component of a successful sale. When the price is too high, the business may stagnate on the market. A price that is too low leaves money behind, and may even trigger suspicion in buyers. Good investment bankers support their valuations with research-backed metrics.
Is the pricing realistic?
Realistic pricing is critical to a successful sale. A good adviser should stick within the proposed value range they suggest because doing otherwise is unfair to all parties. An investment banker should not set unrealistic expectations and then fail to reach those expectations. Sellers want to sell and move on. So if the investment banker is unwilling to commit to a price or offers on pricing, this might be a sign that they are more interested in getting the listing than in successfully selling your company.
How do you protect confidentiality?
A successful sale depends on ensuring no one knows the business is for sale other than potential buyers. If customers, vendors, or staff catch wind of the sale, they may react negatively. This can erode value and undermine the sale. A good advisor understands this, and works diligently to keep the sale quiet. Ask what they will do to protect your business, and then hold them to it.
Evaluate all variables, especially the investment banker’s track record. Then ask the advisor about any issues that are of special concern to you, such as how long the sale might take. Finally, trust your gut. You must be able to closely work with this person for many months, and you deserve a partner whom you trust.
