Selling a business is an important milestone for any entrepreneur. When you’re deciding to retire, pursue new ventures or feel the time is right to leave it can be stressful. Most business owners begin with a single question “How much is my business worth?” While it’s easy to determine the value however, negotiating the most beneficial deal requires patience, strategy and the right direction. That’s the place where an M&A (Mergers and Acquisitions) advisor comes in. But how to hire an M&A advisor, and what do they actually do? Let’s break it down.
What are the duties for M&A Advisors?
You might think that selling a business is just as easy as putting it on the market and then waiting for buyers to appear. In reality, it’s far more complex. An M&A advisor will guide you through the whole procedure.
They are responsible for ensuring your business is valued accurately. Many business owners underestimate the value of their business because of their emotional connection, however, others underestimate its value out of fear of scaring away buyers. It is possible that you are wondering “What do M&A advisor perform?”. One of the most important aspects of their work is providing a market-based valuation. They consider factors such as revenues, trends in the industry and projected growth in order to arrive at an acceptable price.
They also find and vet potential buyers. It’s not just about whether the buyer can afford to purchase it’s about finding a buyer that is in line with your company’s vision and ensures the smoothest transition for your employees as well as customers.
Negotiation follows. M&A experts know how to negotiate the best deal, while also protecting your interests. They do all the heavy lifting, from structuring payment plans and ensuring legal compliance to managing your business.
How Much Is My Business Worth?
How much is my company worth? Revenue isn’t the only factor in determining your company’s worth. The value of your company is determined by many factors.
Financial performance In the context of profitability, revenue stability and cash flow stability are the most important aspects.
Trends in industry – Certain sectors are highly wanted, resulting in increased valuations.
Potential for growth – A company with the potential to grow gets better offers.
The company’s assets comprise physical assets, such as patents or real estate as well as intellectual property.
Many entrepreneurs make the wrong choice when they underestimate their value or applying a formula that will work for all. Consulting with an M&A advisor can be very advantageous. They study market conditions, buyer demands, and company strength to determine an appropriate and reasonable price.
How to Choose the Best M&A Advisor
Not all M&A advisors are created equal. The best M&A advisors can help sell your business faster and at a better price. But the wrong one could slow down the sale process or leave you with a lot of money. How can you choose the best option?
First, look for a professional with experience. The most effective advisors are those with prior experience in the field and can show proof of past deals that have been successful. They must also have a extensive network of potential buyers, such as private equity firms, corporations and strategic investors.
Then, look at their selling strategy. Some advisors are hands-on, and take you through every step. Others take charge of the process and only inform you on critical points. Choose your level of involvement you are comfortable with.
Finally, discuss fees. M&A advisors are usually paid on a fee-for-service basis. They receive a share from the sale price. Some require upfront charges. Be sure to understand the pricing structure of each M&A advisor before you commit.
What to Expect When You close the deal
When a buyer has been identified and terms agreed it’s time to move on to the final phase. Your M&A advisor can assist you by conducting due diligence, drafting legal agreements and ownership transfer.
The process may take several months but, if have a trusted advisor to help you, it’s considerably less stress-inducing. It’s then possible to move forward with confidence knowing that you’ve made the best result for you as well as your business.
Final Thoughts
It’s not enough to list your business for sale and wait for an offer. You have to find the perfect buyer and negotiate with a savvy approach in order to secure an agreement that reflects the value of all the effort you’ve put into it. An experienced M&A advisor can make the difference. If you’re asking, “How do I hire an M&A Advisor?” look for someone with years of experience in the business, a proven track record and an honest approach. And if you’re still asking, “How much is my business worth?”, the best way to find out is by consulting with someone who is able to position your company for the best value.
With the right direction and guidance If you have the right guidance and support, selling your company could be the most rewarding choice you ever make.
