Understanding the 7 Hats of an M&A Advisor
As we recently discussed, mergers and acquisitions typically follow a standard process from start to finish. And as buyers and sellers move through this process, they are rarely the only ones at the table. M&A advisors play a key role in helping buyers and sellers optimize the transaction for all parties involved. No one sale is like another, so the most effective M&A advisors wear many different hats. Here are seven of the hats we wear most often:
1. Experienced valuator
Few business owners have experience determining the value of more than a handful of businesses. This is the first place where an experienced M&A advisor brings a lot to the table. In addition to knowing how to evaluate historical performance, run valuation models, and update financial statements, experienced advisors often have the most current data on private company valuations.
2. Team manager
Ideally, you’ve chosen an advisor you enjoy working with. Someone you’ll turn to over the long term and feel comfortable having uncomfortable discussions with. Because of that, you can trust your advisor to act as your team manager – assembling the other legal and accounting experts you need at the table to complete a successful transaction. Not all lawyers and accountants have M&A experience. Your advisor can help you to make sure your team is ready to evaluate and negotiate a great deal.
3. Marketing expert
While demand is certainly high these days, sellers still need to connect with the right buyers. M&A advisors help sellers to craft a marketing message that is targeted to reach the specific buyers they would like to deal with. Depending on the desired outcome, sellers may wish to target strategic buyers, private equity groups, or family offices. Regardless of the targeted buyer, running a confidential process is of utmost importance.
4. Buyer recruiter and liaison
Your ideal buyers have seen your messaging … now it is time to get them to the table and start evaluating offers. A great M&A advisor knows where and how to recruit strong potential buyers. Once the offers start coming in, they also recognize great offers amongst a sea of average offers. While wearing this hat, an advisor will obtain confidentiality agreements, set up site visits with qualified prospects, handle buyer questions, and discuss financing details with prospects.
5. Lead negotiator
Like determining the value of a business, not all business owners are regularly involved in high-stakes negotiations. M&A advisors are. They know how to pace discussions, what the industry norms are, and how to keep emotions from overwhelming productive discussions. As such, they play a critical role in the negotiation process.
6. Thorough researcher
As discussed in previous blog posts, due diligence plays a critical role in M&A. It is also time consuming, overwhelming, and nuanced – making it virtually impossible to complete thorough due diligence (buy-side or sell-side) while simultaneously running a business. You will benefit from an M&A advisor with a dedicated team to help.
7. Sale closer
To close a successful transaction, documentation must be managed and a plan must be created for how the actual change of ownership will transpire. While wearing the “closer hat,” an M&A advisor helps this process to go smoothly, according to an agreed upon timeline. Properly dotting ‘i’s and crossing ‘t’s is a critical last step before executing a transaction.
If you are considering selling your business, please contact us for a confidential discussion of your specific situation. We have direct experience helping business owners across multiple industries sell their businesses, as well as relationships with buyers who are interested in new opportunities. We can help you position your business to maximize your proceeds from a transaction.