Being approached by a potential buyer is exciting, especially when it comes as a surprise and there’s a large price tag attached. But, trying to negotiate directly with the buyer disadvantages you. Often resulting in a much lower sale price than what other buyers are willing to pay. Routine buyers are keenly aware of this, which is why they utilize professional advisors to assist in executing the deal.
Take a cue from their playbook, and ensure you also have skilled representation. Here are 12 reasons to hire a M&A advisory firm or investment banker when you’re approached about a sale:
1. A M&A advisor acts as your quarterback managing the entire transaction
Managing the sale diverts attention from daily operations. This can cause the company to decline, negatively impacting value. It is nearly impossible to sell your company while running daily operations, without one or both sides of the equation suffering.
2. A M&A advisor helps prepare your business for a sale, ensuring you put your best foot forward
Your company may not be prepared for a sale. This can cause it to look disorganized and weak. If you don’t put your best foot forward, the valuation will suffer.
3. A M&A advisor creates competitive bidding and maximizes sale price.
A competitive bidding environment is always better for sellers. Why limit yourself to just one or two buyers? The right advisor can create a competitive bidding process that ensures you will maximize the sales price and not leave money on the table.
4. A M&A advisor keeps deal momentum moving forward toward a closing.
Transactions can stall for myriad reasons. Some buyers use the lengthy nature of the sale process to wear down sellers in the hopes they will accept a lower price. An advisor ensures you are not worn down or worn out and sees the deal through to completion, ensuring it actually closes.
5. A M&A advisor acts as your objective advocate.
Negotiations are fraught with emotion and challenges. A dispassionate and experienced approach is best. An M&A advisor buffers you from the process acting on your behalf while minimizing emotions.
6. A M&A advisor helps you set reasonable expectations.
How do you know what a reasonable offer is? How do you know when to walk away, which terms to change, and what is standard in your industry? Your advisor offers expertise that can help you set reasonable expectations.
7. A M&A advisor shields you so that your relationship with the buyer remains positive and intact.
The right advisor ensures your relationship with the buyer remains strong even when you engage in tough-minded negotiations. They play the bad cop so that you and the buyer can remain friendly.
8. A M&A advisor helps reduce the risk of surprises that hurt value.
Unpleasant surprises during due diligence can result in unfavorable price adjustments. An advisor prepares you for this process, reducing the risk of negative adjustments.
9. A M&A advisor provides you with real-world experience gained from years of doing deals.
You may be an experienced business owner, but you almost certainly have not sold a number of companies. An M&A advisor has. They level the playing field, ensuring that a savvy buyer does not take advantage of your comparative selling inexperience.
10. A M&A advisor lends credibility to the deal.
A M&A advisor lends credibility to the transaction, cuts through the noise from competing deals and shows the buyer that you are serious and intend to undertake a professional sales process.
11. A M&A advisor minimizes the risk of costly mistakes.
Advisors have seen the most common mistakes that both sides make, some which result in much lower valuations and failed deals. This means you can learn from others’ mistakes without making those mistakes yourself.
12. A M&A advisor highlights the value inherent in your business.
The truth is that buyers, on their own, often fail to see the full value inherent in your company —and they certainly won’t pay a premium for it. The right advisory team helps buyers see real value, thereby helping you maximize the sale price without forcing you to divert your attention from running your company.
