A business sale is an important milestone for entrepreneurs. The process of selling a business can be daunting, whether you are planning to retire or start new ventures. The first thing that a lot of business owners are asking is “How do I know what my business is worth?”. While getting an estimate may be easy but getting the best price requires patience, planning and direction. M&A (Mergers and Acquisitions) advisors can be of assistance. How do you locate an M&A advisor and what exactly do they do? Let’s break it down.
What are the duties for M&A Advisors?
You might think selling a business is just as straightforward as posting it on the market and waiting for potential buyers to appear. However, it’s much more complicated. You can get help from an M&A advisor to guide you through every step.
Their most important role is to ensure that your company’s worth is accurately assessed. The owners of businesses often underestimate the worth of their company due to an emotional attachment. Many underestimate it out of the fear of scaring buyers away. If you’re wondering, ” what do M&A advisors do?”, one key aspect of their job is providing a market-based business valuation. They analyze factors such as revenue, industry trends and future growth to determine an appropriate price.
They also find and vet potential buyers. It is not only important to locate a buyer who has the money, but also one who is in agreement with your vision for your business and can in the smooth transfer of customers and employees.
Negotiation is next. M&A advisors are expert dealmakers who know how to negotiate the best terms while safeguarding your interests. They can handle the entire work, from arranging payment plans and ensuring legal compliance to managing your company.
What is my company worth?
What’s my company worth? The answer isn’t as simple as looking at your revenue. The value of your company is influenced by a variety of factors.
Financial performance, profitability and revenue consistency are important. The stability of cash flow is equally important.
Trends in industry Certain industries are desired, leading to higher valuations.
Growth potential – A business that has room for expansion often gets better offers.
Assets of the company – These include physical assets such like real estate, and intellectual assets such as patents.
Many business owners make the error of estimating their worth using a one-size-fits-all formula. Consulting with an M&A advisor can be extremely advantageous. They study market conditions, buyer requirements and the strength of the company to determine a fair and affordable price.
How to Select the Right M&A Advisor for Your Company
There are many M&A advisors are alike. The right advisor will help you sell faster and at a higher value. However the wrong advisor could result in the process getting reduced or leave money on the table. What should you consider when deciding?
Prior to that, you should look for previous experience. The most knowledgeable advisors have a track experience of success in your field. They should have a large collection of buyers that includes companies, private equity firms and strategic investors.
Take a look at their approach to selling. Some advisors employ a direct approach, taking you through every step of the process while others are in charge of the process and only update you at key moments. Decide what level of involvement you’re comfortable with.
Lastly, talk about fees. M&A advisors are usually paid on a fee-for-service basis. They earn a portion of the sale value. Some require upfront charges. Check out their pricing structure before committing.
Closing the Deal: What to Expect
Once a buyer is found and terms have been negotiated and agreed upon, you’re now in the final stage. Your M&A advisor can help you by conducting due diligence, drafting legal agreements and ownership transfer.
The process can take a few months, but if have the right professional to help you, it’s much less stressful. After the transaction is concluded and you’re able to move on confident that you’ve achieved the best possible outcome for both you and your company.
Final Thoughts
It’s not enough to simply list your business for sale and wait for an offer. You must find the perfect buyer and negotiate smartly in order to secure a deal which reflects the real value of all your effort into it. An M&A expert will make a big impact. You can hire a M&A advisor by selecting someone with experience in the field and an impressive track record and has a clear process. And if you’re still asking, “How much is my business worth?”, the best way to figure it out is to consult a professional who knows how to position your company to achieve the highest value.
Selling your business is a huge move. If you follow the right guidance you can make it to be the best financial decision you’ve made.