Should You Hire a Sell-Side Advisor or Do It Yourself?
It’s a new year and many of you may be thinking that this is the year that you’ll cash-in and sell your business.
While the decision to sell the successful and valuable business you’ve built over the years can be taxing, you’ll immediately be faced with another, equally-important question. Should you handle the sale yourself or should you hire a sell-side advisor?
Many business owners make the mistake of choosing the former, thinking that it will save them time and money. But, even if a potential buyer approaches you, here is why you shouldn’t attempt to navigate a DIY sale.
Advisors Optimize Value
One of the most important factors in selling a business is ensuring that it is valued correctly in order to establish the best sale price possible. While there are common factors used to determine valuation, such as EBITDA, assets, liquidity, etc., every industry and even locality requires a slightly different approach. If you aren’t experienced in evaluating and negotiating deal points such as working capital and excluded assets, you’re potentially driving the valuation and your net proceeds down.
Advisors Make the Process Efficient
An almost equally important factor is ensuring that the sale process is efficient. Experienced advisors know the common mistakes to avoid and can help you get your business sold quickly. Who wants to spend a year of their lives trying to get through an M&A?
Some common mistakes that slow down the process include:
– Focusing on one potential buyer, usually someone the business owner knows, rather than confidentially connecting with a large pool of potential acquirers. This can hamstring you to the demands of your only prospect.
– Marketing your business poorly or not at all, rather than developing unique and targeted marketing materials for various types of buyers.
– Failing to help your potential buyer through the in-depth requirements of due diligence. This includes not preparing for the sale by organizing your books and analyzing your company’s financial standing before starting the process.
DIY M&As Fail … A Lot
Far too often, business owners find themselves in the midst of a difficult sale process only to see the deal fall apart. However, not executing the deal is not the only way to fail.
When selling your company is your path to retirement, not getting the money you need is just as bad. This commonly happens when business owners don’t take the tax impacts of the sale into account, fail to recognize suboptimal structures in the deal, or fail to minimize all closing risks.
Hiring an Advisor Lets You Focus on Your Business
Rather than stepping away from your business early to navigate a process you likely know very little about, hiring an experienced advisor allows you to focus on keeping your business running at peak efficiency. Showing consistent earnings is key to increasing value, and it’s probable that no one in your business is better at doing that than you.
If you’ve decided to sell your business, then make the smart choice and hire an experienced sell-side advisor. The advisors at Symmetrical have decades of combined experience and will make sure that your needs are met. Contact us, and let’s get started.