Should I Hire a Mergers and Acquisitions Advisor? How Do They Add Value?

As a business owner, you make decisions every day. However, one of the most complex decisions you will ever make is deciding when and how to exit your business. Often, business owners are approached directly with unsolicited offers and elect to negotiate themselves. Others engage a Mergers & Acquisitions Advisor to represent them. Ask yourself the following questions to determine which approach is right for you.

Can I objectively evaluate my business?

To achieve maximum value for your business, you’ll need to appreciate a buyer’s perspective. Can you “normalize” your financials to properly reflect your adjusted cash flow? Can you articulate why your business should sell at a premium relative to your peers?

Buyers value your business based on quantitative (financial) and qualitative (team, industry trends, etc.) factors in the context of dozens of other deals they are considering. An experienced M&A Advisor will evaluate your business through the buyer’s lens, setting expectations on probable market value and deal terms.

Do I have the expertise and resources to ensure an optimal outcome?

How many companies have you successfully sold in your career? Most business owners get one chance to sell their business. Yet most buyers are experienced professionals who acquire companies for a living. Who has the upper hand — you or the buyer with a career purchasing companies on the cheap?

Think about your professional network. It’s likely your industry contacts will generate a few potential buyers. However, the surefire way to maximize value is to have the largest possible pool of qualified buyers competing at the same time. An Advisor brings together buyers and resources to confidentially market your business to a broad buyer pool. Experienced Advisors create competition, keep the process moving, and save time. An Advisor will also have trusted transaction attorneys and other vetted professionals on speed dial, who can quickly mobilize to support the deal.

Throughout the transaction, you will undoubtedly encounter sensitive discussions. Prior to closing, the Buyer may insist on speaking with key customers and employees. Do you know how to facilitate this while maintaining confidentiality and controlling the narrative? An Advisor can help overcome obstacles like this, increasing the probability of deal closing and serving as an emotional buffer for you.

How much time does it take to complete a deal?

It generally takes 1,000+ hours over a 6–12 month period to complete a transaction. This means 1,000+ fewer hours to run your company and certainly increased stress attempting to keep both on track. Buyers expect the business to be run optimally and expedited turnaround time on diligence requests. Should the business experience an unforeseen hiccup while on market (e.g. lost customer/employee), the buyer may leverage this to renegotiate or even walk away. The owner creates the greatest value by doing what they do best — growing the business and outsourcing deal leadership to an Advisor.

Despite these considerations, hundreds of businesses are sold every year without M&A Advisors. However, statistics show that if you want to maximize the outcome, hiring an experienced M&A Advisory firm is beneficial. Of the approximately 100 deals that our firm has closed over the past decade, we have never had an owner tell us that they could have sold the business themselves or that we didn’t earn our fee!