The sale of a company is an important milestone for an entrepreneur. It’s a process that can be daunting regardless of whether or not you are planning to retire, start a new business or think that it’s time to leave. The first question that many business owners ask is “How do I know what my business is worth?”. While getting an estimate can be straightforward however, getting the best deal is a matter of patience, strategy and direction. M&A (Mergers and Acquisitions) advisors can help. But how to hire an M&A advisor, and what do they actually do? Let’s break it down.
What are the duties of M&A Advisors?
If you’ve never had the opportunity to sell a business before, you might think selling it is as simple as putting it on the market it and waiting for buyers to show up. In reality, the process is much more complex. A M&A advisor will help you navigate the entire procedure.
Their main responsibility is to make sure that your company’s worth is assessed accurately. Many business owners underestimate their company’s value due to emotional attachment, while others overestimate the value of their business to keep away buyers. What are M&A advisors do? One essential aspect of their work is to offer market-based business valuations. They examine factors such as the industry’s trends, revenue, and growth prospects for the future to determine an appropriate and competitive price for your company.
Beyond the valuation, they manage the task of finding and vetting potential buyers. Finding a buyer who will align with your vision and assure a smooth transition of employees and customers is far more important than who has the money to buy.
In addition, there’s negotiations. M&A advisors are skilled dealmakers who know how to push for the best terms and protect your interests. They take care of all the difficult tasks, from arranging payment plans and ensuring legal compliance to running your company.
How much is my business worth?
What’s my company worth? It’s not as simple as just looking at your revenue. Your company’s worth is affected by a number of key elements:
Financial performance – Profitability and revenue consistency are crucial. Stability of cash flow is also important.
The demand for certain sectors is extremely high, which leads to higher prices.
Potential for growth – A company with room to expand often attracts 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 mistake of estimating their worth applying a universal formula. This is why having an M&A advisor is crucial as they study the market along with buyer demand and business strengths to determine an appropriate and competitive price.
How to Find the Right M&A Advisor for Your Business
There are many M&A Advisors are alike. The best M&A advisors can assist you in selling your business faster and at a lower cost. While the wrong one can slow down the sale process, or leave your money on the plate. What should you consider when deciding?
Find out if they have experience first. The most knowledgeable advisors have a proven track performance in the sector. They should also be able draw upon a broad network of potential investors, including corporations, private equity companies and strategic buyers.
Next, consider their method of selling. Some advisors employ a personal approach, taking you through each step and guiding you through the process, while others manage of the process and update you at key moments. Determine your level of involvement that you are comfortable with.
Finally, discuss fees. Some M&A advisers may require an upfront payment, while others work on a commission-based model. Before making a decision, make sure you are aware of the structure of their pricing.
Closing the Deal: What To Expect
You’re now on the home stretch. At this point it is the time to consult your M&A advisor will help you through due diligence, legal agreements as well as the transfer of ownership.
It can take several months to finish this process however it’s much easier if you are guided by an expert advisor. After the deal is closed and you’re free to continue with your life and business confident that you’ve secured the most favorable outcome.
Final Thoughts
It’s not enough just to put up your company and then wait for an offer. You must find the right buyer and negotiate well so that you can secure an agreement that reflects the true value of all your hard work into it. A M&A professional could make all the impact. You can choose to engage an M&A advisor by selecting someone with experience in the field with a proven track record and has a clear process. If you’re still pondering, “How much is my business worth?”, the best method to determine this is to consult a professional who knows how to position your business for the most value.
Selling your business is a major step. But with the right advice it can turn out to be the best financial decision you’ve made.
