You, the entrepreneur, by definition, are a person that does things on your own and knows how to get things accomplished. For this reason, it is not uncommon to think about handling the sale of your business on your own from start to finish. However, in many cases, the best entrepreneurs reach success because they understand the power of delegating. It pays to hire experts to guide you through specific situations.
Selling your business is likely the biggest transaction of your life and you only get one opportunity to do it right. For this reason, it behooves business owners to hire an experienced M&A Advisor or business intermediary to help them through the process.
Below we examine the benefits of using an M&A Advisor to represent you in the sale of your business:
1. Developing a Buyer Universe
An M&A Advisor will work closely with you to understand your business and the industry sector that you operate in. They will then research the leading strategic acquirers and private equity groups that have investments, or have invested in your space, to compose a strong buyer list. They will reach out to this group of potential buyers (usually between 100 and 200) directly to gauge their interest in a possible transaction.
2. Positioning Your Business
For buyers to have an in-depth understanding of your business an M&A Advisor will develop a detailed Confidential Information Memorandum (CIM) as the primary selling document for your business. The CIM will cover everything from the history and core competencies of your business to growth opportunities and biographies of key team members. The CIM will also include a financial section that details recast EBITDA and shows financial trends dating back a number of years. This section is very important to maximizing the value of your business.
3. Soliciting Offers
After the initial marketing phase, which includes reaching out to potential acquirers with a blind teaser and an NDA to execute for those wishing to see the CIM, your M&A Advisor will then solicit initial indications of interest. This will provide an idea of where the buyer universe sees the value of your business. From this point your M&A Advisor will work directly with you to pare down the list of potential acquirers and grant the serious parties a management meeting.
After those management meetings are complete your M&A Advisor will solicit a Letter of Intent (LOI) from the buyers and negotiate the best terms on your behalf.
5. Due Diligence
Once terms have been agreed upon and the LOI is signed the due diligence process will kick off. It is during this phase that you can rely heavily on your M&A Advisor to help provide the needed information.
Selling your business can be a long and arduous process and it is important to have an experienced M&A Advisor guide you through the process.