The Winning M&A Advisor [Vol. 1, Issue 4]
Welcome to the 4th issue of the Winning M&A Advisor, the Axial publication that anonymously unpacks data, fees, and terms…
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Maximizing Your Business Sale: The Overlooked Value of an M&A Advisor
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When it comes to selling your business, hiring an M&A advisor might seem like an obvious step, but many business owners underestimate the full scope of the value they bring to the table. Beyond their role as dealmakers, M&A advisors serve as crucial guides through the complexities of a sale.Â
Today, weâre sharing insights from Axial’s sell-side membership on the often-overlooked details in the transaction process, and the essential support an M&A advisor can provide.
During what stage do you spend the most time working with business owners throughout a transaction process?
For additional context, we asked these members, âWhat are some of the areas where M&A advisors provide transaction support that are often overlooked?â We then organized select responses into the following key themes occurring throughout an M&A transaction:
- Pre-Sale Preparation & Process Management
- Buyer Engagement
- Deal Structure & Negotiations
- Emotional Management
We hope the insights shared today, along with Axialâs additional Exit Ready resources, help better prepare business owners exploring an exit.
Thank you to all the M&A advisors who contributed valuable perspectives on this topic. The 15 advisors below are quoted in todayâs article.
Pre-Sale Preparation & Process Management
| M&A advisors help establish a defensible target price, provide a realistic profile of the ideal buyer, and assist in the vetting of suggested M&A attorneys and potential buyers. Robert Champoux - RC Advisory Services |
| A quality M&A advisor will ask questions to the seller early in the process that a buyer is going to ask the seller regarding the employees, customers, financials, and other information. For example, "Tell me why Mr. General Manager is the right person for the job?â or âWhen was the last time that you had a price increase for these customers to offset your cost increases? Why did you wait so long? Let's talk about your adult children who work in the business, what their roles and motivations would be after a sale, and how they might fit into the culture of a different owner." Matt Slappey - Southeast Business Advisors |
| Preliminary Q of E: explanation of 'the process'; assistance in selecting the 'deal team'; what level of confidentiality is appropriate; and when in the process of approaching competitors. Mack Browder - Mack Browder & Associates |
| An advisor isnât going to rush the process, but they are going to know how to keep pace with the deal. Having experience putting together a data room and managing the artifacts that go into it and who should have access to which ones come from experience. Peter Stipher - Private Capital Advisors |
Additional Resources
- Exit Planning Resource Center
- Axialâs Self-Representation Quiz
- Devising your Exit Timeline: Start with your Ideal Exit Date
Buyer Engagement
| Most owners don't realize how important it is to make a good first impression. Many buyers will make a decision based on their first look and then never look back. Other buyers may reconsider, but it can be an uphill battle to not be in a position of weakness. M&A advisors will help you enter well and set expectations to your advantage. Daniel Karalash - ISP Advisor |
| Creating competitive tension among buyers by highlighting the strengths and unique value proposition of the company that they are selling. Advisors also have the ability to market and communicate the right message to the right audience, including the use of jargon that resonates with the Buyer. Alma Johns - Bench Capital Advisory Inc. |
| Finding non-obvious buyers. An advisor's strategic knowledge of multiple industries can identify buyers in tangential industries that are looking to expand their product or service lines. William McDonald - McDonald Dalton Capital Partners |
| M&A Advisor involvement demonstrates preparedness, seriousness, and buyer competition to buyers. It also makes it clear to buyers that the inexperienced seller won't be taken advantage of. Finding buyers is a skill. Almost every client we've worked with has been sold to a buyer that they had never heard of before and never would have found without us. Sellers can't hope to juggle communications with scores of interested buyers and keep their business growing and profitable. Bryan Ducharme - Venture 7 Advisors |
Additional Resources
- Acquirers to Include on Every Buyer List
- Discover Buyer Interest For Your Business
- 12 Lessons for Building a Successful Buyer List
Deal Structure & Negotiations
| Deal terms are often the most overlooked aspect of the transaction process. Owners tend to focus on multiples or valuation. An advisor will help not only break down all of the deal terms and how they affect the final payout but can also more effectively negotiate those terms to the seller's advantage. Vaughne Glennie - Vertess Healthcare Advisors |
| The best outcomes are a multi-variable result, not simply a price. The valuation and price are certainly key; however, the structure of the deal, transition for ownership/executives, and treatment of stakeholders (i.e., employees, community) are of equal importance. Knowing what is expected, what can be negotiated, how much something can be negotiated, and what things could be asked for that nobody is even mentioning are simply the tip of the iceberg. Arthur Petropoulos - Hill View Partners |
| There are a lot of items that seem small but are very important to the negotiation process. One example is how to negotiate a good deal structure (i.e., cash, equity roll, earnout) that is good for the seller, yet the buyer will be able to sign off on it as well. Earnout structures can be very messy but could also be favorable to the seller if structured in the right way. I always say to my clients, "Every sentence can be negotiated in the purchase agreement." Aaron Solganick - Solganick & Co |
Additional Resources
- Sealing the Deal: Breaking Down the LOI
- Due Diligence and the Art of Preventing the Broken LOI
- EBITDA Multiples By Industry ~ Explore Axial’s Winning LOI Hub
Emotional Management
| The amount of time loss of focus on their company by trying to manage a long and difficult process usually results in lost value. Removal of emotion keeps the process moving, as well as the nuances within all the purchase agreements that protect ownership (there is so much more to negotiate and protect other than the purchase price). Todd Cummiskey - VercorAdvisors |
| An M&A advisor provides the emotional absence needed to effectively negotiate the asset. Cláudio Hebling - HeblinGFC |
| Selling a business is an inherently emotional and taxing process. It's a lot of work over a long period of time and increasingly more intense as the process nears closing, and owners typically start to fatigue. In marketing, in particular, the feedback can be emotionally challenging to manage. Having an advisor buffering the process, reshaping communications, working through difficult conversations on behalf of ownership, and similar significantly increases the likelihood of executing a deal. Adam Ginsburg - Salt Creek Partners |
| A big one is aiding in deal fatigue, providing that extra push where needed, especially later in a transaction process, knowing what to push back on in negotiations, and handling that tactfully. Nick Cellura - Climb Advisors |
Additional Resources
- Connect With Vetted M&A Advisors
- The Sellerâs Guide To Preparing For Life After Sale
- Bob Falaheeâs Founderâs Journey: 15 years building SunPro from day 1 to a strategic exit
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