12 May Is an M&A Advisor Necessary to sell for Max?
Does the business owner really need an attorney? A tax advisor? Could he do without and save some money? The answer is “yes,” but he’d be worse off for it. Penny wise and pound foolish, as they say.
So if one wishes to sell a business quietly, professionally and for absolute maximum, is an M&A advisor needed? If so, why?
The question is, what does a skilled M&A advisor do that might add value?
- Prepare and package. Careful preparation and planning are required to present your business in the best possible light, the way buyers want to see it. The offering documents must help buyers visualize and understand the business and see its potential.
- Identify buyer candidates. The business owner may think he already knows all the best buyer candidates, but there are a LOT of buyers around the world. And private equity groups can and do outbid industry buyers. One additional high quality buyer candidate can increase the sale price significantly.
- Maintain Confidentiality. A representative can talk to and screen out buyer candidates without disclosing the identity of the seller.
- Negotiate with skill, experience and intensity. To be sure, business owners are not whips. They’ve been around the block a few times and negotiate on their own behalf all the time. But when it comes to selling the subject business, the owner isn’t the best one for the job. When he asks for more money he’s greedy. When he touts the great potential of his business he’s just trying to pad his own pockets. When a skilled advisor does it, however, it has credibility and garners results.
- Sell. In the end, the most important job the M&A advisor does is SELL! Sell the business owner and the business. The business owner is not the one for the job. He’s what’s being sold, in part. The seller, even if he’s exiting, is a big part of the sale. And the seller’s accountant and attorney play different roles as well. Each wear important hats, neither of which is the salesman.
Can the business seller save a few bucks and, in theory, maintain some control by handling the business sale himself or herself? By simply using their accountant or attorney? Sure, but the deal will have a lower probability of getting done and the net price, if a deal closes, will almost certainly be lower.