Where Does the M&A Advisor Add Value?
M&A Advisors [aka Business Brokers] Add Significant Deal Value to Seller
A survey of business owners who recently sold their companies provides insight into what functions performed by M&A advisors were most valued. Sellers were surveyed after their deal was done to better understand the selling process through their eyes.
1) Seller’s Credibility: The highest ranked areas were about (1) the credibility attributed to the seller based on the advisor’s credibility, coupled with (2) leading the process and (3) having an understanding of the transaction to negotiate on the seller’s behalf. Combining just these factors enabled sellers to achieve a higher value than they probably would have achieved on their own.
2) Sourcing Buyers: Surprisingly, “finding or identifying the buyer” is high, but not at the top of the list. It is important, and there should be a solid process for understanding the logical buyer groups. And, while contacting buyers is easier in today’s environment, maintaining confidentiality without an advisor is problematic.
3) Preparation: The preparation for the sale process is critical and relates directly to credibility. A key concept is the elimination of surprises to the buyer. Surprises unnerve buyers, and unpleasant surprises kill deals. An M&A advisor invests the time to understand the issues and opportunities specific to the seller’s company, and addresses them at the right time in the process.
4) Negotiation and Buffer: One of the top areas of value provided by M&A professionals is the actual negotiations. There is a protocol which keeps deals on track. If the seller tries to drive the transaction components out of order, the deal can get sidetracked – permanently. And, having a third party push on specific deal points gives the seller a buffer – a fallback position if the advisor pushes too hard. After all, the seller can always say their instructions were misinterpreted by their advisor, but what sellers say directly to a prospective buyer is difficult to retract.
M&A Advisors Drive Value: While it may seem self-serving coming from an M&A advisor, the survey of experienced sellers indicates that the use a third party advisor to facilitate their transactions drove significant increases in deal value.
To read the rest of the article, click: Where Does the M&A Advisor Add Value?
The Summit Acquisitions Group — Business Brokers and M&A Advisors — specializes in the sale, appraisal, and financing of privately owned companies ranging in valuation from $750,000 to $25,000,000. Contact their offices in Atlanta, GA or Charlotte, NC for a free consultation.