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The M&A Advisor: A Surprising Source of Value

By October 12, 2020December 23rd, 2021No Comments

One of the most common mistakes entrepreneurs make when selling a company is not realizing the value that an experienced M&A advisor adds to the deal. They want to reduce costs, and they see advisors as little more than networkers. This misconception can hurt the likelihood of selling your company and prevent you from achieving maximum value. 

Here are the most significant ways an advisor can offset the expense of their fees and drive up sale value: 

  1. Strategic planning: If you hire an advisor 6 months to 3 years in advance of a sale, you can begin the strategic planning process to drive value higher and identify the characteristics of a successful exit for your company. Formal relationships with strong advisors are critical during this time, since you still have time and space to address business shortcomings and identify tactics for growing value. 
  2. Valuation. Valuation is a critical aspect of any transaction. Your advisor can talk to you about your sale price goals, identify any barriers to achieving those goals, and let you know what you can do to maximize sale price. They also lend the expertise and insight of an outsider, helping you feel more confident in the valuation. 
  3. Timing: Your motives for selling your company might have little to do with the business itself. Perhaps you’re burned out or want to spend more time with family. It’s important to correctly time the sale, regardless of your personal motivations for it. A seasoned M&A advisor can help you choose the right window of time. 
  4. Post-transaction goals: Money is probably not the only goal of your transaction. You may have other goals, such as staying on after the sale, earnouts, ensuring a strong legacy, supporting your team, and selling to the right buyer can change the process. An advisor knows how to achieve each of these goals. 
  5. Structuring the ideal process: There’s more than one way to exit a business. The right advisor can help you decide how best to leave your company with the most cash and in a way that protects the people left behind. 
  6. Transaction preparation: One to three months prior to the transaction, an advisor becomes more active, working to prepare for the sale. They prepare marketing materials that can help you find the right buyer. They structure a list of potential pre-screened buyers. They may even contact a list of pre-screened buyers on your behalf. 
  7. The transaction: During the transaction, your advisor plays an integral role. They narrow down a list of potential candidates based on your goals, then work with you to draft a letter of intent. They help you with negotiations and other daily undertakings, so you can focus on running your business. They discuss with you the ideal deal terms, and set reasonable expectations for what you can expect from the process. They may also play a key role in post-integration planning, helping to ensure your business succeeds even when you are no longer at the helm. Each of these roles can add significant value to the transaction, ensuring you do not get taken for a ride by a more experienced buy-side team. 


About Vision Point Capital

For over 20 years, our team has supported our clients with comprehensive advisory services to help them with their complex business valuation and transition needs. Few other firms offer such a complete suite of business transition services as it relates to M&A, Valuation, and ESOPs.

Our client’s personal goals are at the heart of everything we do. We are well versed in advising clients across a broad range of industries and help them manage and navigate valuation and all the business transition alternatives available to them. In fact, when you work with Vision Point Capital, you leverage our resources, experience, and expertise to help you grow faster and optimize value for reaching a successful business transition.