If a business owner is planning to sell their business, they might have dreams of retirement—or of moving on to their next venture. No matter what their dreams are for the future, achieving them begins with getting the right support today. Many owners make the mistake of assuming that, because they sell products and services every day, they also have the necessary skills to sell their business. But you need an investment banking firm for that. Selling a business is an extremely complicated undertaking that can easily become a full-time job. Moreover, any buyer worth selling to will have an expert advisory team on their side of the negotiating table. The seller will be at a significant disadvantage if they don’t hire their own investment banking firm.
So why does the process always begin with advisory? Here’s what you need to know.
Planning for M&A
The most value from your company will be extracted if there is a plan for a sale well ahead of the process. An investment banking firm can help identify key sources of value, as well as any liabilities that might be able to be addressed. They get to know the company and how it runs, so they can more effectively market it to buyers. The more lead time, the better, so if a sale is imminent call an investment banking firm today.
Valuation
How much is the business worth? And who is most likely to see its true value? Most owners struggle to answer this question because they’re too close to it. An investment banking firm can be immensely helpful with valuation. They can also help sellers understand why buyers might be interested—and whether any specific factors might increase or undermine their interest. Valuation surprises are a common challenge in middle market businesses, so work with a valuation expert early.
Identifying and Marketing to Buyers
No matter how connected a seller is in their industry, an investment banking firm with significant experience has more connections, and more knowledge of who is most likely to be shopping for a deal. An advisory firm can prepare marketing materials designed to attract the ideal buyer. And then, they can pre-vet potential buyers to screen out window shoppers and present the seller with a list of highly qualified buyers. This saves immense time and can ensure the highest possible sale price by choosing a buyer who will see the company’s true value.
Managing the Deal
From signing of the purchase agreement through closing, the deal demands significant time and energy. This includes negotiating deal terms, developing an integration plan, responding to due diligence requests, communicating with the team about the deal, and much more. It’s simply impossible for business owners to give their full attention to their business and to the work of selling it. And this means the business could lag at a time when growth and success are critical. Or the seller could lose sight of the deal, causing it to lose momentum. With an investment banking firm in the sell-side corner, though, business owners are free to focus on their business while an expert team sees the deal through.
Don’t go it alone. The sooner help is sought, the better.