You finally decided the time is right to sell. Then, one of the first questions you may ask yourself is “Can I do it myself, or should I hire an M&A Advisor? Sometimes business owners feel they are capable of learning just about anything when it comes to business sales, marketing and even M&A. This series, divided in four publications, aims to open your eyes with a few important reasons of why it would be wise to use a M&A Advisor.
Are you really saving?
Occasionally a business owner decides to handle the sale himself, mainly due to two leading factors; the perception it will save him time and more commonly money. Generally, both of these presumptions are incorrect. What you may invest to pay a professional, you will more than gain back in other ways.
When you are entering into a sale negotiation, one of the most imperative factors you need to ensure is that your company, the business in which you have invested thousands of hours and lots of money is properly valued. Arriving to a price is not an easy task. Typically an evaluation will consider EBITDA multiples, industry multiples, assets, future cash flows, required working capital, growth potential, etc.
Furthermore every industry is different and every company within that industry has its particularities requiring different approaches. In summary doing a valuation is both a science and an art in which advisors spend their entire career mastering. If you aren’t experienced in evaluating and negotiating deal points, such as working capital, excluded assets or discount rates, you’re potentially, and most likely underestimating your valuation. This is more commonly the case if your potential buyer has hired a consultant as you are now in negotiations with an expert.
For this reason, even if a potential buyer approaches you, you should not attempt to navigate the sale yourself. Call us for additional information.
Next: M&A advisors bring clarity.