Are M&A advisers really necessary?
Time and time again, when discussing the potential sale of their business with owners, one question frequently arises: “Can’t I just sell the business myself?”
The answer is, naturally, “of course you can.” Many businesses exchange hands day in day out without M&A representation; however, whilst M&A advisory costs may be avoided at the initial stage of the process, other costs will almost certainly be incurred later down the line that could have been otherwise avoided.
Mid-market business owners are typically heavily involved in the day-to-day management of their businesses, so it is important to consider that the sale of a business typically takes on average at least 1,000 hours over a period of between 9 to 18 months. Such a commitment obviously distracts from daily operational matters and can have a profound effect upon a business’ overall performance – potentially lowering the value received on exit.
The lack of proven M&A marketing capabilities can also have a potentially detrimental to the overall value achieved; this is an area a good M&A adviser will be skilled in, along with substantial knowledge and experience in corporate negotiations and deal structuring, ensuring the opportunity is promoted directly to the correct individuals in organisations that could benefit from the acquisition.
Opening up the opportunity to this level of competition drives a deal value substantially higher than could ever possibly be achieved without such interest.
Finally, in the vast majority of cases, the sale of a business is a one time event for most mid-market business owners. Accordingly, owners are at a significant disadvantage due to their lack of experience, whereas M&A advisers handle such matters on a day-to-day basis.
This experience affords significant advantages to clients, meaning they are able to take a step back and continue managing their businesses to ensure they are in the perfect position for sale. At the same time, they have the knowledge and comfort that the sale process is being managed by a skilled team that understands the nuance and intricacies of the process.