Remember the last time you asked for help? Perhaps you didn’t know how to do something, it was too difficult to do alone, or you wanted to focus on other things. With acquisitions, all three may apply: they’re complex, time-consuming, and pull you away from running your business. They seldom get easier with experience, either, but a little help goes a long way.
As you know, we supply you with a ton of acquisition resources. We’re always here to answer questions to help you get Acquire’d. But if it’s your first acquisition or one that’s potentially life-changing, you might also consider hiring an M&A advisor to help steer you through the process and secure the best outcome for you. Our founder did this when he sold his.
Think of an M&A advisor as part coach, part star player. They can mentor you, refer you to experienced legal counsel, collate documentation, and so on. Or, they can do everything on your behalf, from negotiating with buyers to editing your listing details to approving or rejecting letters of intent (LOIs). The right M&A advisor, therefore, could help you sell quickly, easily, and for the highest price.
What Does an M&A Advisor Do?
An M&A advisor is an acquisitions expert. They help coordinate acquisitions and negotiate business terms that make sellers and buyers happy. As a result, their fees often pay for themselves. Here’s a sample of advisor services and how they benefit you:
Negotiate with buyers
If you’re unfamiliar with the acquisition process, you’re fighting with one hand behind your back. Buyers will seek to win the upper hand, and if you’re unsure of what’s fair, you might take their lead. An M&A advisor, in this case, can confidently negotiate on your behalf and ensure the buyer plays fair.
Valuations
Since advisors spend their working days handling acquisitions of various sizes, startups, and industries, they have a good idea of market dynamics. They can help value your startup and provide insight into what the market considers “fair”, which helps you determine when to walk away from an offer or grab it with both hands.
Prospect for buyers
When you list your startup on the marketplace, the advisor can share it with their professional network to increase your buyer pool. This could attract better offers (since buyers will be competing) and help get your startup Acquired faster.
Find the perfect right buyer
The perfect buyer probably doesn’t exist (there’s always a trade-off somewhere) but the right one does. To find them, you need to understand how your goals and those of prospective buyers align. If you don’t know what the right buyer looks like, you’ll waste time on those who wouldn’t be a good match. An advisor takes time to understand your goals so they can connect you with the best buyers.
Advising on stock and asset transfer
Once you’ve signed the purchase agreement, the next step is transferring assets. Depending on the complexity of your startup, this can prove tricky, and you don’t want to derail the acquisition because of some ownership or contract dispute. An advisor not only helps isolate your acquisition assets under the purchase agreement, but also transfers them to the buyer.
How Much Does an M&A Advisor Cost?
Most M&A advisors charge a percentage fee on the size of the deal (the bigger the deal, the lower the fee). Others might charge an hourly rate, flat fee, or some other structure entirely. Always negotiate with the advisor to agree on a reasonable fee for the services on offer.
The advantage of a commission-based fee is that you only pay when your startup is Acquire’d. The money deducts from your acquisition funds rather than your bank account. You can factor this into your thought process when negotiating with buyers, for example.
Should You Hire an M&A Advisor?
Acquisitions are difficult, especially if you’ve not done one before. Size seldom equates to complexity: even if you’re selling a smaller business, it can be stressful, and there are no guarantees. An M&A advisor, therefore, helps de-risk an acquisition while also helping you achieve your goals.
Here are some other benefits of hiring an advisor for your acquisition:
Reduce Complexity
The advisor handles the tough stuff (interfacing with legal, assisting with due diligence, and so on). This reduces stress and gives you the mental space to process the acquisition and everything it entails. Instead of scrabbling around from one resource to the next, hire an M&A advisor to do all that coordination for you. They’ll tell you what to do and when.
Get Pro Expertise
Sometimes it’s better to hire an expert to do what they do best so you can do what you do best (such as operating your startup). If you’re hoping for a life-changing acquisition, it makes sense to ensure you have the best people to achieve that – and that might not be you.
Reduce Emotion
Acquisitions are business transactions like any other. But when there are millions of dollars at stake, suddenly it’s a life-changing event. Sellers and buyers can suffer from emotional tension. If you hire an advisor, you break that tension by introducing a third party whose interest is in closing the deal as efficiently as possible. It clears the air.
Better Price and Terms
Advisors are expert negotiators and know more about acquisitions than you do. They know how to negotiate what you want from the acquisition. They understand what’s fair, can help value your startup, and know how to negotiate the best result for you.
Faster Acquisition
An advisor’s professional network may help increase your buyer pool. They also know how to represent you in the right way to attract offers. Where you might only experience acquisitions a handful of times in your career, they’re an advisor’s bread and butter, what they do every day. You might spend weeks just figuring out the process but an advisor knows it from the start.
More Time
Too many founders neglect growth while navigating an acquisition – a rookie move that’ll result in a lower offer. Acquisitions are hard and there’s a lot of laborious work to do. But don’t let that affect your growth and profitability goals. Instead, hire expert help to handle the acquisition while you focus on delivering results.
The choice of whether to hire expert help is yours. You don’t need an M&A advisor, and you might learn a lot about the acquisition process by doing it alone once. But if you’ve any doubt as to your ability to navigate through the process, it’s a no-brainer: hire some help.
How Do You Hire an M&A Advisor?
This is the easy part!
Acquire.com has a fully vetted M&A advisor network and we’ve made working with advisors much easier and faster than before.
Instead of accessing a directory (the old way), you request expert help right within your seller dashboard. Our in-house counsel, James Graves, will then match you with the right expertise – saving you hours of scrolling the directory. We recommend having your listing completed already so James can more accurately match you to an advisor.
If you don’t have a seller account, create one free now and follow these instructions. You can also email James for an introduction at james@acquire.com.
The content on this site is not intended to provide legal, financial, or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional before any M&A transaction. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any M&A professional.
