How to Find the Right M&A Advisor
Finding the right M&A advisor is a task worth spending time on. The right advisor can make or break your business transaction, and there are lots of options to choose from. Here’s why it’s so important to get this right, and how to maximize your chances of connecting with the perfect M&A advisor.
Selling a business is not a one-person job. It’s a highly complex, time-consuming process with incredibly high stakes, and it requires a team of people all working together in close alignment.
One of the most important players on your sell-side team is the M&A advisor. This role is often criminally overlooked and underrated, but it’s no exaggeration to say the right M&A advisor can make or break your transaction.
In this article, we’ll look at why M&A advisors are so valuable, what they bring to the transaction process, and the steps you should take to connect with the perfect M&A advisor for your business and goals.
What does an M&A advisor do?
Your M&A advisor is your trusted guide, helping you navigate the murky and treacherous landscape of selling your business. The best M&A advisors combine experience, connections, and skill to ensure you get the best possible outcome, aligned as closely as possible with your goals.
Here are some of the key responsibilities of an M&A advisor:
Be a constant source of advice and guidance as you go through the sale. Your M&A advisor should be someone you can always get in touch with to share their wisdom and expertise at any point during the sale.
Draw on their pool of connections to bring you in contact with all the right people. This ranges from obvious connections, like potential buyers, all the way to niche specialists who can help you work through specific areas of your sale.
Understand what makes your situation unique and tailor their approach accordingly. Selling a business is not something to take lightly — it may very well be the single largest financial decision you ever make. As a result, it’s crucial for your M&A advisor to understand your specific situation, help you avoid mistakes, and be someone you can place a great deal of trust in.
Make sure your company is valued correctly. Valuation is one of the most important aspects of an M&A transaction. It involves striking a careful balance between many factors to ensure you get a fair price for your business without scaring off all potential buyers.
Help you beyond the sale. A good M&A advisor will get to know your long-term goals, including what you plan to do next after your business is sold. This allows them to give you more relevant guidance and advice, ensuring your company changes hands in a way that’s aligned with your goals and the goals of your team.
What makes a good M&A advisor?
A good M&A advisor combines a number of key skills. Here’s what you should look out for when choosing your advisor:
Relevant experience. Your M&A advisor should have a solid base of experience assisting in the sale of businesses like yours, in similar industries, with similar transaction types.
A strong track record of getting results for their clients. You should spend time researching your advisor’s past achievements before working with them, and don’t be afraid to reach out to their previous clients for testimonials.
Trust. Your M&A advisor will be guiding you through one of the biggest business transactions of your life, with an enormous amount at stake. It’s essential to have a strong rapport with your advisor and the ability to trust them with the sale of your business.
How much do M&A advisors charge?
M&A advisors all charge different amounts, and the amount your advisor will charge will depend on a number of factors like the size of your business, the value of the deal, the time involved, the experience and reputation of the M&A firm, and many others.
Usually, M&A advisors will charge a fee upfront, usually ranging from a few thousand dollars to the high five figures and beyond.
After that, fee structures are often based on a percentage of the total sale amount, for example, 5%. It’s well worth taking the time to discuss pricing with your M&A advisor early on to establish whether it’s worth it for you and to avoid any unpleasant surprises later.
What do you need to know from your M&A advisor?
There are some key questions you should ask your potential M&A advisors as soon as possible while getting to know them. Getting these questions answered allows you to work out if an M&A advisor is right for you and your needs, and avoid any future issues. Here are some questions you should ask:
“How will you find the value of my company?” — ask your potential M&A advisor about the methods they typically use to value companies and how they would approach yours.
“Is now the right time to sell my business?” — A good, trustworthy M&A advisor will give you a clear and honest answer to this question. The answer may be “no”, and they might advise you to wait for a better opportunity.
“What similar deals have you worked on?” — This question allows you to get a feel for your potential advisor’s experience and how it compares to your circumstances and specific goals.
“What does your process typically look like?” — Ask about things like time frame, marketing strategies, and typical milestones to gain an idea of how the transaction process will look and how you can prepare and set your expectations.
“How will my business operations be impacted?” — The M&A process is long and often complex, and your business operations could be affected. Ask your potential advisor how this could happen and the steps they will take to help you focus on your business.
How to find the right M&A advisor for your transaction
Finding the right M&A advisor won’t be a quick process. You should take your time here, and you’ll probably talk with a number of potential advisors before settling on the right one for you. Here are the steps to follow when seeking out your M&A advisor.
1. Start early
It’s not uncommon for business owners to start building their relationship with their M&A advisor years in advance of the sale. Even if you don’t have concrete plans to sell your business any time soon, it’s still wise to make connections with M&A advisors ahead of time and start laying the foundations for a relationship.
Starting early gives you time to get to know your advisor, and for them to get to know you and your business. This way, when the time comes to sell, they already have a firm understanding of who you are, what you do, your goals and future plans, what a successful outcome looks like for you, and much more.
2. Research, research, research
It’s impossible to understate the importance of research when it comes to choosing an M&A advisor. Spend as much time as possible learning as much as you can about a number of different M&A advisors.
There are many resources you can use to research advisors. Their own websites and social media profiles are a good place to start — browse the content they share and read about their backgrounds and past accomplishments.
Once you have narrowed down your search to a handful of promising advisors, get in touch and open a relationship with them to learn more and hone in on the best fit. Prepare questions in advance and try to learn as much as you can about their previous work and how they have helped businesses like yours.
3. Ask others in your industry for their recommendations
Your personal network is an invaluable resource for connecting with your ideal M&A advisor. Reach out to fellow business owners, attorneys, accountants, investors, and more. These people will all likely know several M&A advisors and can point you in the right direction of someone who could be a good fit.
Ideally, you know someone who successfully completed a transaction similar to yours and got results that match your goals.
Work with BizNexus
Finding the right M&A advisor is a challenging task. It’s something that often takes months or even years, and it’s a task that deserves serious time and effort. The right M&A advisor can make or break the sale of your business, so it’s well worth investing heavily in the search for one.
The BizNexus community is home to many M&A advisors, from various backgrounds and with a range of skill sets and specializations. It’s a great place to connect with advisors, grow your network, and possibly get in touch with the advisor who can make your transaction goals a reality.
