Three Questions To Ask Any M&A Advisor

Business owners seeking to sell will — and should — engage a qualified investment banker to identify potential candidates and negotiate the sale that will maximize their benefit. The challenge lies in finding the right partner.

While no easy task, selecting the right M&A advisor can make the difference between getting a deal you like and one that doesn’t. Putting your “baby” up for acquisition often comes with high expectations. Asking the right questions of an investment banker to determine which one will work best for you will give you a greater chance for a successful outcome.

At a minimum, pose these three questions:

Can you relate to my circumstance?

M&A advisors hold a wide array of experiences both as a deal maker but also as a business owner. The good ones can uncover your “magic,” or unique value proposition, that will drive the biggest interest.

Moreover, experienced investment bankers will look for not only who wants to buy your company, but who needs you. That will broaden the field of prospects and, if done right, bring forth multiple suitors in a competitive bidding process that will drive up the sale price. M&A advisors who know their stuff will pitch and negotiate from a more advantageous position if more than one prospective buyer comes to the table.

How long will it take?

The time frame can vary based on the objectives of a client and the nature of the transaction. The sale process involves several phases including marketing, negotiation, due diligence and documentation preparation. Adding these together, selling a business can take from 6 to 12 months.

Ask what could make the deal go faster or what can cause hiccups. While nothing is foolproof, anticipating opportunities, as well as potential setbacks, can go a long way in ensuring that the process of getting your company sold at an acceptable valuation goes as smoothly as possible.

How do you get paid?

The answer to this question should discuss more than the amount itself. Good M&A advisors will align their payments to coincide with when the business owner receives their money. Clients benefit under these circumstances. Investment bankers that operate this way will continue to hold a vested interest in ensuring the owner gets their due compensation and will work hard to make that happen.

The true market value of a company comes from achieving the highest price a buyer will pay a seller. How that gets done, though, depends on the skills of the investment banker. Asking questions before engaging will help you achieve the highest value in the most effective and efficient manner possible.

About the Author: Gary Shields, CFA, is a Partner in Shoreline Partners, LLC, who has 30 years of experience in helping business owners achieve their financial goals. He has held senior investment banking positions with major firms and has extensive experience in investment banking, research, and venture capital. Gary can be reached at gshields@shoreline.com.