Is a Mergers & Acquisitions Advisor Important?

When the time comes to explore selling your business, there are a multitude of questions that an owner will ask him or herself: Is my company sellable?

What is my company worth? What is the process? How do I find the right buyers? Where do I start? All these questions, and more, will need to be answered. 

A qualified M&A advisor is there to answer your questions, guide you through the process and make sure that everything that can be done is being done to mitigate the risk and to assure a successful transaction, maximizing the company’s value.

As a business owner, you know your business in and out. You know what works. You know what doesn’t. Most importantly, you know what you should never do. Can you say the same for the process of selling your business?

Of course not. How could you? The bottom line is you do not know what you don’t know. When you are navigating what will arguably be the most important transaction of your life, you need to be in the know! 

The role of an M&A advisor is multifaceted. He or she will be by your side from the very beginning, educating you, guiding you through the complex process and tilting the scales in your favor to assure the best possible outcome.

As is the case in most situations, it is best to be proactive when selling your business. Ideally, you will want to start thinking about and planning the process several years before you want to sell. It is important to know that the process of selling your business can take up to 8 to 12 months. 

Preparing your company well in advance from both a marketability standpoint as well as on the operational side are actions that could pay dividends when you are finally ready to sell. These are just a few of the key factors that your M&A advisor or advisors will share as they educate you in the process.

You will also need to know how much your business is truly worth. The only way to quantify this is with a certified third-party proper valuation. This might sound academic, but you would be surprised how many business owners leave money on the table because they priced their business too low.

On the opposite end of the spectrum, others price it too high, essentially pricing companies and themselves out of the market. There are so many unseen factors that go into the proper pricing of a business. An M&A advisor will ensure that your business is properly positioned to sell in the market.

In fact, every phase of the process will be made more efficient by an M&A advisor.

• Confidentiality is one aspect of selling your business that must be strictly maintained. It is also virtually impossible to maintain if the business owner is handling the sale directly. If news of your intent to sell the company leaks out to your customers, vendors, competitors, and employees before you are ready to reveal the news to them, it would have a significant negative impact on your business. Employees could leave, vendors could demand cash in advance and customers could find new options if the future of the company is uncertain. Confidentiality is critical to the marketing process and your M&A advisor will manage that balance for you. 
• Marketing a company for sale without a complete understanding of the process not only can severely reduce your chances of a successful transaction but can also affect the business itself.  Proper marketing documents are essential and will enable your M&A advisor to market your company properly and aggressively while simultaneously maintaining confidentiality. A Blind Profile will be developed to share just enough about your company to pique a potential buyer’s interest without giving away the identity of the company. A second document called the Confidential Memorandum will also be developed by your advisor for interested parties that would like to take the next step, and as its name infers, will share more intimate information about the company for sale. However, this Confidential Memorandum should not be distributed freely.
• A strict vetting process should be executed before the Confidential Memorandum is shared. This process should include a strong Non-Disclosure Agreement (NDA) along with financial and managerial background checks. This will not only protect the business owner’s interests by maintaining confidentiality but will weed out the seriously interested parties from the “tire-kickers.”
• During the Due Diligence phase, you should be in the homestretch. An M&A advisor will keep things moving by driving the process. When progress stalls, and it will, they find a way to keep things moving forward. There is a saying that a deal dies three times before finally closing.  M&A advisors are well aware of this and, in most cases, are able to find a way to get the train back on the tracks and bring the deal to a close.

Selling a business, in most cases, is the culmination of many years of hard work building and nurturing your business and should be a one-time event. Executing a successful sale of a business involves a complicated and detailed process which requires the coordination of many moving parts. 

All aspects of the process need to be carefully planned and implemented. If executed correctly, the outcome should be a successful sale that will maximize your financial return. If not, you could be in a scenario where you leave money on the table, or worse, the business could not sell at all and even cause irreputable harm to the business itself.

Is an M&A advisor important? You decide for yourself.