Why Use An M&A Advisor?

The sale or purchase of a business is an intricate undertaking that significantly transforms the trajectory of the business and the financial security of its shareholders. These types of transactions involve several phases. A good M&A advisor adds value in each phase. The value and expertise of an M&A advisor are compounded alongside high-quality M&A-experienced service providers (attorneys, wealth advisors, tax accountants, etc.). Below are select examples of situations where an M&A advisor adds significant value:

Unsolicited Offer:

The primary concern for sellers is traditionally around valuation and how that valuation is paid. In today’s M&A environment, it’s exceedingly rare to receive 100% cash for the sale of a business. M&A advisors navigate complex negotiations with the benefit of non-public knowledge from prior transaction experience, robust financial models, and their unique network of buyers (private equity and strategic companies). Additionally, an M&A advisor can quickly provide access to a targeted buyer pool to create competitive tension. Following a signed offer or letter of intent (“LOI”), an M&A advisor will provide execution support in a way that preserves the purchase price, mitigates buyer and seller tension, and provides further negotiating expertise on critical remaining deal points (net working capital and other financial terms, etc.).

Full Auction Process:

M&A advisors have a broad network of contacts encompassing strategic, financial, and international buyers. By tapping into this network, sellers gain access to a larger pool of high-quality potential buyers, maximizing the likelihood of finding the right fit for the seller and achieving the best possible deal terms. Professional marketing materials are designed and shared with interested buyers in a thorough but easily consumable format to expedite decisions and provide a higher level of confidence to close.

Management Buyouts / Generational Wealth Transfers / ESOPs:

The process of selling internally is often appealing but far more complex than owners and employees realize. Putting together a fully dynamic pro forma financial model is critical to demonstrate to the parties that the transaction is not only feasible but also fair. This financial model is often used to raise capital (equity and/or debt). Significant shareholder education is also often required given the limited deal experience these parties tend to have.

Misconception:

Can’t my attorney or accountant play the role of an M&A Advisor? Attorneys and accountants traditionally 1) don’t generate fulsome marketing material, 2) aren’t familiar with complex financial models utilized by sophisticated buyers (LBOs, DCFs, etc.), and 3) lack the necessary volume of experience in negotiating a variety of financial terms to know what is “market” or current with industry trends. M&A Advisors work very closely with M&A attorneys, tax accountants, and wealth advisors to create a complete deal team to maximize outcomes for clients. Each play a critically important role.

Conclusion:

Overall, the decision to sell or purchase a business is multi-faceted. Leverage the experience of a trusted M&A professional to ensure the transaction is best positioned to align with your objectives. For more information, contact either Ely Friedman, Founder & Managing Director (859-707-7840 or ely@truceca.com) or Ryan Berning, Vice President (513-614-4046 or ryan@truceca.com).