Are you asking why?
Before you head down the path of engaging and M&A advisor it is entirely reasonable to ask – why? Following are a few of the key reasons that entrepreneurs will use an advisor when transitioning their business versus taking a Do-It-Yourself approach:
A good advisor will expose your company to well researched potential buyers that you likely have never heard of thereby increasing your chances of a successful sale. Here at RMA we leverage the extensive network of our experienced team and build on that by using platforms such as Pitchbook and Capital IQ which allow us to find appropriate family offices, private equity groups and strategic purchasers worldwide. Using this research driven approach we frequently find that the successful purchaser is an entity that was not known to us or our client at the start of the process.
Managing The Process
Selling a company is a complex process with numerous steps and constantly shifting dynamics. An experienced M&A advisor will have well developed systems and processes designed to produce consistent competitive tension and a smoother faster sale. It is unlikely that anyone doing this for themselves the first time is going to achieve ideal results.
Skilled advisors will know what ‘market’ is for key deal metrics such as value, vendor carry, holdbacks, etc. and will be skilled at negotiating to meet or exceed your expectations. Negotiating based on unreasonable requirements that are well out line with market will quickly yield a suboptimal outcome…or no outcome at all.
Completing a sale process is 6 to 9 months of intense work which includes seemingly unending requests for due diligence information, numerous meetings/calls and extensive time for analysis and strategy development. An M&A advisor will assume a good portion of this workload to allow you to maintain focus on operations during the sale.
Close Rate & Timing
M&A studies have repeatedly shown that when a seller uses an experienced advisor the likelihood of a successful close is materially increased and the time to close is considerably shorter. The two are certainly correlated as it well known to advisors that ‘time kills deals’.
Ultimately the worth of an advisor comes down to the incremental tangible value that they add. You should have high confidence that any advisor you use is going to be able to sell your business for more than what you could get doing it yourself. At a minimum the additional value should cover their fees but ideally should be some multiple of their fees. At RMA we are proud of our track record of exceeding our client’s expectations and have several examples where we’ve outperformed by 50%, 60% and 70%+.