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Selling your business is a decision not to be taken lightly.. You’ve worked hard to create a company that serves customers’ needs and makes valuable contributions to the economy and your local community. Not only do you want to profit from your hard work, but you also want the business to continue to thrive, even after you’re no longer leading it.
But how do you go about getting assistance with the sale? We’ve all heard tales of transactions gone wrong, typically involving snake-oil salesmen or even crooked politicians. But thankfully, that’s not how it has to be.
With the right ground work and armed with our handy tips below, you’ll be in a position to select the right M&A advisor; someone who will work in your best interests and guide you through the process, so that you’ll walk away from the deal confident that you’ve got what you wanted and the business is in good hands.
Experience counts in most endeavours, but it’s especially helpful in the sale of a business. Each business deal has its own complications and nuances, and the more deals an advisor has worked on, the more likely you are to achieve a positive result.
No two deals are alike. Therefore, the more experience your advisor has, the more prepared they’ll be to navigate the often-circuitous route to a satisfactory agreement. To discover whether or not an advisor has relevant experience, ask them these questions:
In addition to asking these questions, request references for any advisors you’re considering. Speaking with past clients will help you know how their transactions went and whether they’re genuinely pleased with the results.
Not only should business advisors have formal degrees in business, finance or related fields, but they should have credentials that help them navigate complicated transactions.
During the sale of a business, advisors must manage:
And these aren’t the only issues involved. Although credentials aren’t everything, they’re good indicators that a professional has the tools necessary to manage the sale of your business.
Another essential detail to consider as you search for an advisor, is the fee structure of the service. The reason this is so critical comes down to one factor: incentive drives behaviour.
If the fee structure incentivises the advisor to get your business sold quickly, you might end up with a quick sale, but at a lower price than you otherwise could have had. Also, keep in mind that hefty upfront fees could indicate that the advisor may not actually be too good at closing deals.
Your advisor should be the liaison between your business, the potential buyer and other professionals (like accountants and solicitors) that you’ll need to finish the deal. Your advisor understands what it takes to close the deal, and if they have close ties to a team of skilled professionals, things generally will run more smoothly.
Loose lips sink ships, and this is especially true when it comes to M&A transactions. When selling your business, the last thing you want is for employees or the competition to know about your plans before you’re ready.
Employees may become nervous because of an uncertain future, and competitors might attempt to take the upper hand. Therefore, confidentiality is critical, and you need a business advisor who understands this and takes necessary steps to protect it.
Look for an advisor who will collect a signed non-disclosure agreement (NDA) from each prospective buyer. You may also want to talk with potential advisors about what to say if confidentiality is breached.
As you talk with potential advisors, review the topics above. You’ll need a partner with a proven track record and impressive credentials, access to a team of skilled professionals and deep experience. To talk with one of our expert advisors, reach out to us at Ulton. We’ve helped many business owners through the successful sale of their companies, and we’d love to help you, too.
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