Mergers & Acquisitions: Save time with an advisor

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Monday, October 5, 2020

Q. If I know the most likely buyers for my business, do I need to hire an M&A advisor?

A. Of course you don’t need to, but here are five key reasons why you would want to.

Advisors know the decision makers

You may know the company, but do you know the M&A folks within those companies and what information they like to see? An advisor knows the strategic importance of your business and how to present it to each buyer, which can be very different. 

Advisors create a process

Knowing other potential buyers are in the wings, an advisor is better able to hold a buyer to a timeline and create a competitive process that moves a deal forward to a fast close at the highest value.

Advisors let you do your work

Preparing and marketing a transaction takes significant time away from running your business at a time when you want it firing on all cylinders. An advisor carries the brunt of the up front work on a deal, letting you focus on operating and financial results.

Advisors can act as bad cops

If you are continuing on with the buyer to run and grow your operation, you want to have a friendly relationship with the buyer, which can become contentious in the throes of negotiating a deal. Having an advisor to negotiate on your behalf, dig in on difficult terms and generally act as a buffer saves your relationship for a productive future.

Advisors know other buyers

Advisors are in regular conversation with private equity firms looking to put their capital to work. Advisors vet these firms so that you don’t waste time with unfunded search firms, tire kickers or firms outside the sweet spot of your business niche, geography and size. Yet, often advisors can uncover financial buyers with domain knowledge and available capital to be competitive to the most strategic buyer.

Samantha Lincoln is a managing director at Paragon Ventures. Reach her at 415-786-8153 or slincon@paragonventures.com.