What are the top reasons to hire an MA advisor to help sell your business?
Running a business is all about making the right decisions.
One of the toughest decisions you will have to make as a business owner is selling your business.
The acquisition of a business can be tricky, and it comes with many challenges.
From finding the right buyer to making sure you get the most value for the hard work you put in growing your business. There is a lot at stake during the selling process.
Trying to sell your business without proper experience and help is difficult and risky.
Are you unfamiliar with the process of selling a business and have no one to help you sell your business?
Then, you may end up losing money in the deal, or worse.
That is where M&A advisors come in with their expertise in selling businesses.
Remember that mastering the storytelling side and how you are positioning your business is critical when it comes to engaging and speeding up the process. This is done via your acquisition memorandum. This is super important to reach a successful acquisition. For a winning acquisition, memorandum template take a look at the one I recently covered (see it here) or unlock the acquisition memorandum template directly below.
Working with an M&A advisor is not only going to reduce the amount of effort and time it takes to sell your business.
But they can also help you get a solid deal, and optimize the outcome on all fronts.
Merger and acquisition advisors have been around for a long time.
However, a lot of businesses still have failed to leverage them to facilitate and optimize their selling process.
This article will explain some key reasons why an M&A advisor should be a part of your next acquisition.
What are the reasons for selling a business?
Let’s jump into the reasons to hire an MA advisor to help sell your business.
But before that, it is important to know why people sell their business in the first place.
Here are some common reasons why business owners choose to sell their businesses:
Benefiting from high business growth
Every business goes through a series of stages after being launched until it reaches the rapid growth stage.
Once the growth stage has passed, there is always a risk that a business may decline.
In addition, a business is most profitable and attractive to investors during the high growth stage.
So say, if the business owners feel like their business might decline after the growth phase.
Then, they may want to avoid the risk and sell their company while still flourishing.
A fast-growing business that is making money can sell for good value.
On the other hand, if you try to sell a business when it is on a decline, you may not get a good enough deal out of it.
Therefore, business owners often decide to strike while the iron is hot and sell their growing business.
That is instead of holding on to see if it stays profitable.
See How I Can Help You With Your Fundraising Efforts
See How I Can Help You With Your Fundraising Efforts
A very good offer
Some business owners don’t necessarily want to sell their business just because they are worried about it becoming less profitable in the future.
There are cases when business owners get an offer so good that they have to take it and sell their business.
Say, a business is selling for a price above its face value or the offered incentives are too significant.
Then the business owners may decide to sell it. You may have to sell to satisfy your other shareholders.
Oftentimes competitors may want to buy a business for higher than market value to eliminate competition.
They may want to acquire a valuable asset in the process. One which they can unlock more value in themselves.
A poorly performing business
There are cases when businesses fail to perform as well as their owners expected despite all their efforts.
The only way owners can avoid making further losses and walk away with some money from their failing business is by selling it.
It is obvious that a declining business is not going to fetch very good offers.
However, selling such businesses gives the owners enough money to cover their expenses or start a new business.
Or at least saves them from bankruptcy, and a ding to their reputation.
Investors that see the opportunity of a turnaround in a failing business often buy it for a low price.
Then they use their expertise to make it profitable again.
Changes in the business landscape
Every business owner tries their best to ensure their business is running as it should.
However, some forces are out of the control of business owners.
Restrictions by the government, trade bans, pandemics, and other macro-environmental factors make it nearly impossible for small business owners to keep their business afloat.
The traditional dine-in restaurant industry is just one example of businesses that were negatively affected by the coronavirus pandemic.
The pandemic caused many restaurants to close down because of the social distancing protocols.
The businesses affected by changes in the business landscape are often acquired by investors looking to expand or gain more assets.
A business takes a lot of time and effort to establish and grow.
However, there are always new opportunities available to business owners that they may want to explore.
Even if a business is running successfully and generating profits, owners may want to jump in on a new business opportunity.
The easiest way to finance a new company is by selling your old one, which is a key reason why businesses are sold.
As long as a business is doing good, it can sell for a good price.
It can generate enough profit for a business owner to jump on a new business opportunity.
Getting assistance with that new venture in the future could be one of the reasons to hire an MA advisor to help sell your business. Perhaps when fundraising is not a path to follow any longer.
Keep in mind that in fundraising, storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Everyone has to retire at some point, and the easiest way to fund your retirement is by selling your business.
Now, of course, it is essential to have a retirement fund.
But selling a business is going to give you the extra cash you need to live the retirement to its fullest.
As long as your business is doing good, you can sell it for a good enough amount to pay off your debts.
Or buy a new house to spend the rest of your life in.
These are just some key reasons for selling a business.
There can be any number of situations where owners simply can’t run a business and have to sell it to get cash.
No matter what the cause of selling a business is, the goal is almost always the same. To raise as much money as possible through the sale.
That is where M&A advisors come in to help you reach your desired acquisition goals.
Reasons To Hire An Expert M&A Advisor To Help Sell Your Business
Mergers and acquisitions have hit a new record high in the year 2021.
So if you have been planning on selling your business, you are likely to find a good deal in 2022 as well.
With that said, you need help from an M&A advisor if you want to increase your chances of selling your business for a profit.
Here are some reasons to hire an MA advisor to help sell your business.
And why an expert should always be in your corner when executing the sale.
They speed up the selling process
If you are trying to sell your business, then chances are you want to get the money as soon as possible.
Keep in mind that it is entirely possible that it may take you many months or years to sell your business.
However, when you add the expertise and experience of an M&A advisor into the mix, this duration reduces drastically.
Not to mention, the deal itself may take several months.
And if you don’t have enough time to spend on the negotiations process, you can fail to close a good deal.
Bigger companies have dedicated M&A staff that can handle the negotiations no matter how long it takes.
On the other hand, smaller businesses often end up selling their business for less than what it is worth.
That happens because the negotiations were taking too long.
An M&A advisor can not only help you get the right price for your business but also help you sell quickly.
A business is always worth more at the time when it is generating the most revenue.
And if you fail to sell it at the peak time you may not get the target value for it.
Working with an M&A advisor is a sure-shot way to sell your business at the right time to get the most value out of it.
You can expect expert assistance from the M&A advisor when working out the asking price. If you would like more information on how to value your company, check out this video I have created. You’re sure to find it helpful.
Help you get more for your business
Business acquisitions involve significant amounts of money. Ranging from millions to billions of dollars.
The money involved in acquisitions increases with the size of the company.
However, there is always room to get more value for your business when you are selling it as long as you understand the negotiations process.
Having an M&A advisor looking over your acquisition deal can increase the amount of acquisition premium by up to 25% or even more.
This means if you go into a selling deal with a party without the right knowledge and expertise, you may get less than what your business is worth.
M&A advisors handle acquisition deals regularly and know how to calculate the correct asking price.
They put together a plan for your acquisition.
Rely on them to perform market research, and analyze industry trends to negotiate the highest possible price for your business.
These are only some of the reasons to hire an MA advisor to help sell your business.
M&A advisors offer a backup plan
When you are going into a business sale on your own, you will soon realize how difficult it is to find a suitable buyer.
Say, you find a party that is genuinely interested in your company and you enter the negotiations phase.
You will not have time to work on a backup plan in case the first party backs off.
A lot can go south in an acquisition deal, and there is no guarantee that the negotiations will result in a deal.
If the negotiations reach a dead-end or some aspects of the deal don’t check out during the due diligence phase, you might not have a backup plan.
So either you will have to start the negotiations all over again or accept the buyer’s offer no matter how undesirable it is.
M&A advisors provide a safety net to businesses because they have access to other parties that may be interested in your business.
So instead of dragging on with a failing negotiation, you have the option to switch to another interested party.
In short, an M&A advisor is going to have a backup plan to increase your chances of selling your business for the target price.
The security that an M&A advisor brings to the table during an acquisition process allows business owners to explore more options.
They can do this without feeling pressured by a single buyer into making a bad deal.
M&A advisors help overcome the obstacles
Acquisitions are complex processes, and you are bound to come across hurdles during your selling process.
Some common obstacles that you may face when selling your business include:
- Compiling detailed paperwork, including information about financials, vendors, contracts, and other key aspects of your business for past years. An M&A advisor will help you compile all of the paperwork and help make the acquisition process smoother.
- Vetting a potential buyer requires access to connections within the industry and knowledge that most small business owners don’t possess. M&A advisors can help overcome this hurdle by vetting potential buyers using their expertise and networks to make sure you are dealing with the right people.
- Market uncertainty can be a major hurdle in selling your business. This uncertainty can severely delay your selling process or cause a loss in the value of your business. An M&A advisor will analyze the market conditions and advise you on whether it is the right time to sell your business or not.
Startup owners rarely have the experience and time needed to maximize an acquisition.
Even small to medium-sized firms often find themselves struggling to close an acquisition deal.
When you consider the high stakes involved in selling a business the investment in hiring an M&A advisor can be well worth it.
The reasons to hire an MA advisor to help sell your business that have been listed above hold true for almost every acquisition.
M&A advisors are an integral part of the acquisition process.
And if you are planning on selling your business you should definitely have an advisor on board.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.