Insights

Increase Your Selling Price By Choosing the Best M&A Advisor

Welcome to the “Steps to Selling your Business” blog series. We are excited to guide you along this journey to help you understand all that is required when you sell your business. If you would like to connect with one of our team members for a discovery call, please use the contact page and one of our team members would be happy to connect with you.

There’s an unexpected but very real side effect that sometimes strikes as you begin the process of selling your company: an overwhelming, palpable sense of lostness.

Maybe it’s been a long time since you’ve felt this out of your depth. You’ve been in this since the beginning; you started the company, learned the ropes, and shaped the course of its development and growth over years of sacrifice and hard work. No one knows this business as you do.

But once you start thinking of selling your business, it can be jarring to find yourself in the middle of an entirely new set of processes and functions that aren’t familiar or business-as-usual in any way. If you haven’t done this before, you can expect to feel overwhelmed by the information and the nuances while you’re initially wrapping your mind around the path forward.

As you do your homework, the risks of getting this wrong should start to become apparent.

This is why you must choose a great Mergers & Acquisitions (M&A) Advisor to lead and protect you through the journey. There is too much at stake to do otherwise.

Today I want to give you a piece of advice that will help you choose a great M&A advisor. It’s important because this very first decision – selecting the right firm – will have consequences at every step of the journey to closing and beyond.

The only M&A Advisor you should work with will show evidence from the very beginning that they won’t undervalue your business at the time of sale.

That’s one of those statements that might seem too obvious to express. Of course, maximizing the value you receive on the sale is the desired outcome. But it’s surprising how often business owners leave millions or tens of millions on the table when they sell because they didn’t have the right advisors. If you get this wrong – it’s simple – you lose, every time.

How can you decide?

Fortunately, if you ask the right questions and you listen carefully when you are interviewing the people who want to advise you, you will know.

I suggest that you look for two key indicators of the mindset of your potential advisors and ask one important question.

Mindset Point 1. They Want to Know the Story of Your Business

Every business owner knows their business is more than what can be seen in the financial statements. This is your life’s work. Your company has shaped and formed your trajectory and your story. You’ve invested in its success with more than just money.

We all know the importance of getting the numbers right. Your numbers will be scrutinized at the most granular level, worked with, disputed, fed into models, and digested.

You need world-class professionals in charge of your numbers.

This isn’t a question of being a great accountant – this is a matter of being an M&A advisor with great accounting insight! There is a massive difference – the numbers are just the start.

There is a story behind the numbers. That’s right, the story is what drives the numbers.

When you are selecting your M&A advisor, consider how much of their initial curiosity is focused on the numbers, and how much is focused on getting to understand you and your business. Are they focused on the story behind the numbers?

Mindset Point 2. They Look for the Numbers Behind the Numbers

When I’m hiring new advisors to join our team, there’s a certain quality I look for—one that I’ve come to understand is the differentiator between a good M&A advisor and a truly great one. I look for people who know how to translate the numbers into words and translate stories and activities into numbers. That’s what separates great M&A advisors from all of the rest.

Great M&A advisors listen to what you say about your business and then translate all of that into understandable numbers.

Great M&A advisors listen to what you say about your business; its hurdles, wins, and future, your strategies, new activities, and changes in the external factors you face, and then translate all of that into understandable numbers. 

We have always found exciting value drivers in every client’s business, often hiding in plain sight and never fully reflected in the financial numbers. Great M&A advisors know how to put these in motion and factor them into the valuation of your company.

Key Question: What is the Track Record of the People Who Will be Advising You?

Experience matters. Your lawyer, public accountant, or friend who just sold their business might have M&A experience, but, trust me on this, it’s not the right experience.

A great M&A Advisor has lots of current experience finding the best buyers for your business, creating competition between them, and extracting all the value you have created building your business.

Great M&A advisors will quickly tell you about their closing rates (ours is over 90%). Be bold in asking about their track record, and don’t settle until you get a clear answer. Great experience always makes a difference.

Finding a great M&A Advisor is, in many ways the most important step you could make.

You must choose the right M&A Advisor if you’re going to maximize the success of the sale.

Listen closely to what your candidates are saying. What are they telling you about who they are? What sense do you get of their values? Remember to trust your instincts. You’ve been at this a long time; you know a sales pitch when you hear one. What are you hearing behind the words? Do you get the sense that they care, or is this simply an opportunity to feed a transaction into one end of the machine and collect money on the way? Can they do the job you need?

If you don’t like what you hear, cross them off your list. The value of your business is at stake.

In the next installment of this series, we’re going to pose two questions to ask yourself as you begin the process of selling your business. The Power of Why