Choosing an M&A advisor

Choosing an M&A advisor

Hiring Mergers and Acquisitions advisors to handle the sale of a business may not be the most important “purchase decision” a business owner will ever be making – but getting it wrong will surely put you on the backfoot.

A few points to think of:

  1. Client needs. What do you specifically want from an M&A advisor? You may be in a position that you do not yet fully know – because it is your first time or because there actually are various possibilities. But it is key to form your own view first the then receive feedback.

  2. Topical understanding. The times where company trade sales are done just by good marketing are over (if they ever existed). There are many exceptions, but the rule is that an advisor who understands your business in detail will be able to better navigate market, buy-side and process dynamics.

  3. Staffing. The pitching team needs to be the execution team. There is no point agreeing an assignment with a marketer who then hands off execution to juniors you never met.

  4. Industry relationships. It goes without saying that a partner who is basically your shop front to the buyers audience better has a strong network to the potentially relevant parties. However, in times of internet, LinkedIn, industry conferences, and an overall relatively integrated industry, it may be more important how good an advisor is in establishing relationships where they do not yet exist, as opposed to having gone to school with one of the potential buyers.

  5. Execution experience. It helps when people have done before what you need doing. This could include the same type of transaction, size, sector, and geography, but also situations where context or structural challenges were similar and experience in identifying solutions is required more than boiler plate activity.

  6. Structural creativity. Some sales are simply sales. Most are not though and the advisor may need to be able to work with potential buyers towards a transaction structure that meets the objectives of both sides.

  7. Fees. Be sure to negotiate fees where interests remain aligned should success be in danger. It will not feel too good if you receive offers below expectations (or none), and your leaves you hanging on top of that.

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