About a third of business owners receive an unsolicited purchase offer each year. If you received such an offer, what would you do? If you’re like most owners, you might be willing to sell for the right price. Perhaps you’d be flattered by an offer, especially if the price is higher than you anticipate. But how do you know the price is fair? How can you discern whether it’s truly time to sell?
Business owners eager to embark on the next chapter may attempt a DIY process when they receive an offer. The problem is that you’re in over your head, and you might not even realize it. A sale is a major undertaking that requires significant experience and skill. The buyer likely has experience purchasing other businesses, which gives them a significant advantage. This might be the first and only time you ever sell your company, which leaves you vulnerable.
You need a skilled team on your side—at minimum, a lawyer, accountant, an M&A advisor, and usually a wealth manager. Here are four reasons to hire expert help in the form of an experienced investment banking firm.
Assessing the Offer
Most owners do not know the true value of their business. Some grossly inflate the estimated value, while others undervalue their company. An M&A advisor can help you understand the optimal sale price range, as well as factors driving value. Even if the initial offer is reasonable, your advisor can push a buyer toward a better offer. Moreover, they can help you understand how final deal terms affect total value, and ensure you negotiate for the best possible deal terms. Your advisor can also recruit additional buyers, nurturing a competitive landscape that can push the first buyer into a higher offer.
Managing Due Diligence and Information Flow
Controlling the flow of information is critical to the success of any sale. Reveal too much too early and you could leak trade secrets to a competitor. Wait too long and you may not be able to fully market your company. The right advisor can help you decide at which stage to share sensitive information, both with the buyer and with customers and employees. They’ll also help you navigate the myriad challenges of due diligence, ensuring the process moves at a speedy clip that preserves value and gets you closer to closing.
Negotiation Tactics
Corporate and PE purchasers know all the tricks of the negotiation game. You may be out-negotiated without even realizing it. Your advisory team levels the playing field. They can deliver bad news and play bad cop, too, preserving your relationship with the buyer when it matters most. This is especially important if you’ll be involved in the business after the sale.
Focusing on What Matters
When you’re selling a company, you can’t allow it to slide into decline. Yet managing a sale can be a time-consuming and stressful process. The right team of advisors manages the sale on your behalf, so you can do what you do best: run a successful company.
About Madison Street Capital
Madison Street Capital is an international investment banking firm committed to integrity, excellence, leadership and service in delivering corporate financial advisory services to publicly and privately held businesses. Over the years we have helped clients in hundreds of industry verticals reach their goal in a timely manner.
Our experience and understanding in areas of corporate finance and corporate governance is the reason we are a leading provider of financial advisory services, M&A, and valuations. With offices in North America, Asia and Africa, we have adopted a global view that gives equal emphasis to local business relationships and networks.