By Brad Buttermore
Managing Partner and CFO
Art of the Deal is an occasional series about the steps involved in selling your business.
Selling a business is a complex transaction, and middle-market firms may face headwinds that large businesses, due to their size, do not. Here’s a look at some of the potential headwinds that middle-market companies face on the sell-side, followed by ways an M&A advisor can help:
1. The C-suite may not have sufficient M&A transaction experience to know the finer points of an M&A transaction that comes from extensive deal-making experience — whether that involves strategy, preparation, marketing, due diligence, negotiations or closing the deal.
2. Executives may be “too close” or invested in the company to establish a value or selling price and terms that are acceptable in the marketplace.
3. The company’s executives may struggle to identify and reach those prospective buyers who not only have the ability or the interest to acquire the business, but may also be best aligned with that company.
4. They may not have the bandwidth to engage in the process of locating, interviewing, and managing the time-consuming steps required for a successful sale while still running day-to-day operations. The seller must be able to manage communications with multiple parties simultaneously in order to maintain the pace of the process and drive value.
Hiring an M&A advisor can help with all the issues we’ve just described above. Here’s how:
- An experienced M&A advisor will have deep industry expertise to evaluate the marketplace and form the strategy that aligns with current market, industry parameters, and shareholder interests.
- An M&A advisor should act as a filter of unnecessary business interruptions by overseeing the selling process which involves handling the identification, interviewing, qualifying and communication of more than one buyer at the same time. This allows management to concentrate on what they do best: running the company. An advisor worth his or her salt will know what constitutes a material issue that should be brought to the owner’s attention and when to buffer the owner from unnecessary distractions.
- The M&A advisor will oversee the multidisciplinary M&A advisement team that may consist of legal counsel, accounting and tax experts, communications or marketing professionals, and C-suite representatives. I liken the advisor to the conductor of the orchestra, driving all of the smart and talented parties along a timeline and to a conclusion within a reasonable timeframe.
A respected and experienced M&A advisor will work hand-in-hand as a trusted partner alongside the business owner, managing the complicated process of selling — handling everything from timing, strategy and valuation, all the way to closing.
Capital Alliance Corporation is a Dallas-based investment banking firm with an extensive international reach and a 40+-year history of providing trustworthy advice to private company shareholders who want to sell their businesses. Our team has deep operational and M&A experience across many sectors, including human resource management.