Merger and Acquisition Advisory Firms & Their Role in Successfully Selling or Buying a Business
The phrase Mergers and Acquisitions Advisory Firms is somewhat of a misnomer, as it encompasses so much more than just an acquisition of a business or two businesses merging. It includes the sale or purchase of a business, as well as business valuations and properly designed and executed business exit & succession plans.
What are Merger and Acquisition Advisory Firms?
Perhaps you’ve wondered what the initials “M&A” Advisors stand for. Maybe you have contemplated the factors involved in the sale or acquisition of a business but have not had time to fully investigate. This article provides a brief overview of the Merger and Acquisition (M&A) Advisors industry and addresses potential concerns of a business owner considering selling their company.
Merger and Acquisition activity is not typically two large companies merging as the name implies. Instead, it is often the sale of a business from one owner to another or an acquisition by a strategic or financial buyer.
Why do I need to utilize the services of Merger and Acquisition Advisory Firms?
Business owners sell their business for many reasons, the most common being lifestyle changes such as retirement or divorce, the need for better diversification of assets, and financial necessity. Many business owners fail to consider that while their business may sell in as little as six months the sale could take up to two years. The successful sale of a business is no small task. It requires much preparation and appropriate expertise in deal structuring to protect both the buyer and seller, due diligence on the part of the buyer, and expert process and project management.
What Merger and Acquisition Advisory Firms do?
It bears mentioning that a Mergers and Acquisitions Advisors role is not all about buying and selling companies. Other important aspects include succession & exit planning and business valuations work. Exit & succession planning is much more than simply selecting one’s replacement; a successful exit strategy ensures the future viability of the business. In other words, exit planning ensures that the business will persist once the current owner is no longer involved.
Business valuation is an important consideration for any business owner, whether they are considering selling their business or simply wish to increase the value of their enterprise. A sound business valuation prepared by advisors with expertise in valuations as well as mergers and acquisitions. Business valuations go beyond the business’s finances, taking into account additional aspects such as the management team, facilities and equipment, customers and suppliers, owner’s role, growth potential, trends in the industry, and the general business environment. Most importantly, the value ascribed to an entity is not an arbitrary number; rather, it should be a defensible assessment based upon an analysis of both quantitative and qualitative factors. As a best practice, a business offered for sale should be valued by a qualified, independent valuator with expertise and experience in valuations and mergers and acquisitions services.
With an exit plan in place and a business valuation to support your asking price, you may decide to take the next step of marketing your business for sale. While mergers and acquisitions activity has been down since 2008 there is a slow increase in mergers and acquisitions activity. A number of reliable sources predict strong mergers and acquisitions activity over the next 15 years largely fueled by baby boomers exiting their businesses. Currently in the US, there are more buyers than available businesses for sale, primarily businesses with $1 million EBITDA or higher.
Once a prospective buyer is identified, it is essential that they be adequately qualified. Buyers should provide solid answers to questions such as: Why are they interested in buying this business? Is this business the right fit? Is the buyer qualified to run such a business? Is the buyer’s financial status sufficient for this transaction? Taking the appropriate steps to find the right buyer helps prevent the regrettable case in which value is destroyed because confidentiality was breached or the wrong buyer took control of the business. If a buyer is determined to be a good candidate for the acquisition, they will conduct a period of due diligence in which they are granted privileged access to the company’s facilities and critical documents that affect their buying decision.
A lingering concern on the part of the business owner will be the impact to the company’s customers, suppliers, employees, as well as any family members involved in the business. For this reason, confidentiality is of utmost importance. These individuals and entities should not be made aware of the anticipated sale during the due diligence process.
How to Choose the Right Merger and Acquisition Advisory Firms
When seeking the guidance of mergers and acquisitions advisory firms consider their credentials expertise, business philosophies, and ethics. As stated earlier, confidentiality is imperative. When divesting of a company, ensuring its sustainability and future success should be a top priority. Ensure that advisors advising you in this process share your commitment to suppliers, customers, employees and the longevity of the business itself. Mergers and Acquisitions Advisors should serve as a trusted partner to you and your business.
One might consider entrusting their accountant or attorney with the sale of their business. Although these professionals possess expertise in their respective fields they are not usually best suited to market a business for sale and to provide all the levels of expertise required for a predictable and successful mergers and acquisitions outcome. In this instance, it is best to engage the services of mergers and acquisitions advisory firms since they are the only professionals with all of the expertise and experience specific to mergers and acquisitions. Your mergers and acquisitions advisors will work with your existing accountant and attorney and will leverage their valuable knowledge and experience to ensure that the transaction is executed in a manner that minimizes risk and ultimately provides the greatest value to you, the client.
American Fortune Merger and Acquisition Advisors Offers Sell-side (Business Sale) And Buy-side Mergers And Acquisitions.
By Brian S. Mazar, CBI, MBA
Learn just what Merger and Acquisition Advisory Firms do at American Fortune by calling 800-248-0615.
We have served clients with our exceptional mergers & acquisitions advisory services in the following areas of the USA: Columbus Ohio, Atlanta Georgia, Lexington Kentucky, Bowling Green Kentucky, Nashville Tennessee, Memphis Tennessee, Cincinnati Ohio, Dayton Ohio, Toledo Ohio, Los Angeles, Cleveland Ohio, Pittsburgh Pennsylvania, Baltimore Maryland, Indianapolis Indiana, Chicago Illinois, Detroit Michigan, Flint Michigan, Tampa Florida, St. Louis Missouri, Kansas City Kansas, Des Moines Iowa, Minneapolis Minnesota, Louisville Kentucky, Oklahoma City Oklahoma, Dallas Texas, Fort Worth Texas, Denver Colorado, San Francisco California, Salt Lake City Utah, Phoenix Arizona, Lexington Kentucky, Los Angeles California, San Diego California. USA. Our corporate offices are located in Los Angeles, CA and Louisville, KY.