Selling a business is a huge accomplishment for any entrepreneur. When you’re deciding to retire, start new ventures or think it’s time to go on with your life this process can be daunting. The first question many business owners ask is “How do I know what my business is worth?”. While getting an estimate isn’t difficult but getting the most value requires a lot of effort, strategy, and guidance. M&A (Mergers and Acquisitions) advisors can assist. But how to hire an M&A advisor, and what do they actually do? Let’s break it down.
What can M&A advisors offer?
If you’ve ever sold a company you might think that it’s as simple as putting up the business and waiting until buyers are ready. In reality, the process is more complicated. An M&A advisor is there to guide you through each stage of the process.
They’re accountable for ensuring that your business is valued accurately. Some business owners underestimate the value of their business due to the emotional connection, while other overestimate the value of their business to keep away potential buyers. It is possible that you are wondering “What is an M&A advisor do?”. One of the most important components of their work is providing an appraisal based on market data. They take into consideration factors such as revenue, industry trends and growth prospects to arrive at a fair price.
They also find and vet potential buyers. Finding a buyer that can meet your objectives and assure a smooth transition of employees and customers is far more important than who can afford to buy.
Negotiation is the next step. M&A advisors are experienced dealmakers who are able to get the best deal while safeguarding your rights. They manage everything from arranging payments to that you are in compliance with the law. This lets you focus on your business and the completion of the deal.
How much is my business worth?
The main question all business owners eventually have to ask is “How do I know how much my business is worth?” Revenue isn’t the only thing that determines your company’s worth. Many factors can affect your company’s value
Financial performance – Profitability, revenue consistency, and cash flow stability all are crucial factors.
Industrial trends Certain sectors are desired, leading to higher valuations.
Growth potential – A business with room to expand often will attract more offers.
The company’s assets – These include physical assets such as real estate and intellectual assets like patents.
A lot of business professionals fall into the trap of estimating their worth or use the same formula. This is the reason consulting with an M&A advisor is vital as they study market conditions and buyer demand as well as the strengths of the company to establish a fair and reasonable price.
How to Choose the Right M&A Advisor
Not all M&A advisors are created equal. The right M&A advisor can aid in selling your company faster and at a better price. But the wrong one might slow down the selling process or put money on the plate. So, which one should you decide?
Experience is the first factor you should look for. The best advisors will have a track performance in the industry. They should also have the ability to connect with a broad network of potential investors, including private equity firms, corporate as well as strategic buyers.
Look at how they approach sales. Some advisors will take you through the entire process, while others will manage the process and will only communicate updates in critical moments. Decide on the level of involvement that you’re comfortable with.
The last thing to mention is that it is important to discuss fees. Most M&A advisors operate on a commission basis that is based on a percentage the sale price but some may be charged upfront. Be sure to understand their pricing model before signing.
What to expect when closing an agreement
When a buyer has been identified and terms agreed, you’re in the final stage. In this phase, your M&A advisor will assist you to with due diligence, legal agreements as well as the transfer of ownership.
The process could take a few months but, if you have a trusted advisor to guide you, it’s considerably less stress-inducing. After the transaction is concluded and you’re able to move on with confidence that you’ve got the best result for you and your business.
Final Thoughts
Selling your business requires more than simply putting it on the market and waiting for a buyer appear. It also requires finding the right buyer, negotiating intelligently and getting a deal where the value of the work you’ve done is recognized. A M&A specialist can make a huge impact. If you’re asking, “How to hire an M&A advisor?”, start by seeking out someone with industry experience, a strong record of success, and a transparent procedure. If you’re still thinking, “How much is my business worth?”, the best way to figure it out is to talk with a professional who knows how to position your company to achieve the best value.
Selling your business is an enormous step, but with proper guidance, it could also be one of the most rewarding financial decisions you’ll ever make.