Business Owner Survey Concludes M&A Advisors Add Significant Value
What do M&A advisors do? Do they add value to a seller?
A recent survey concluded that engaging a M&A Advisor or Investment Banker adds significant value to the seller during the business sale process.
The survey explored observations from business owners after selling their companies. The study included 63 participants whose companies were sold between 2010-2014. It represented 18 industries and included owners of privately-held businesses ranging in value from a few million to almost $250 million.
How M&A Advisors Add Value
All survey participants agreed that engaging an M&A advisor added value to the transaction. Data from the study revealed several areas in which M&A advisors added value. They include:
This was the highest rated factor. Sellers felt that buyers viewed them as more credible based on their use of an M&A advisor. The M&A advisor spearheaded the deal-making process and lent professionalism and credibility to the client.
Managing the Entire Transaction Process
M&A advisors act as the deal quarterback ensuring the sales process moves forward and maintains momentum. Also, an advisor frees owners from the daily deal grind so they can focus on running the business. This alleviates owner stress and time commitment. Plus this prevents the business from falling into decline during the sale process, which will have detrimental affects,
Identifying and Soliciting Buyers.
Identifying and sourcing credible buyers and cutting through the competitive noise to get their attention can be difficult. M&A advisors implement a solid process for identifying and soliciting target buyers on the seller’s behalf. This may be another avenue through which advisors improve seller credibility.
Preparing the Seller and Acting as an Unemotional Buffer.
M&A advisors help sellers prepare for the sale process. This includes setting reasonable value expectations, organizing due diligence information and preparing marketing materials to position the company in the best light.
Also, an M&A advisor should be adept at identifying business risks and finding a creative solution to mitigate those risks. This can help eliminate unpleasant surprises that erode value or kill deal momentum.
Survey participants also agreed that M&A advisors were helpful buffers. because they could remove emotion from the transaction process and ensure the buyer and seller maintained good communication.
Keeping Communication Open and Negotiating Momentum Moving Forward.
A M&A advisor help keeps communication open and flowing between seller and buyer. This was extremely important during due diligence and emotional deal negotiations. A sale inevitably includes some challenging moments. A M&A advisor can help smooth over these issues and anticipate ahead of time when they might arise.
M&A Advisors: A Key Driver of Value
Sellers consistently concluded that engaging a M&A advisor conferred significant value. The additional value almost always outweighed the extra costs...by a significant margin.