Entrepreneurs are successful because they are versatile and are unafraid to take on the challenge of doing what needs to be done at each stage in the life cycle of their company. So it’s natural for company owners to want to take on the task of selling their company as one more personal challenge that they can do as well as an outside expert.
As I have mentioned in my last few blog posts, some company owners chose to handle the process of selling their company themselves. Some of these owners successfully sell their company for a high valuation. Many of them successfully sell their company, but for a lower price or on weaker terms than they may have deserved. And too many of them aren’t successful at selling at all.
There are a number of reasons why smart owners hire investment bankers to manage the process and represent their interests in the sale of their companies. An outside M&A advisor stays focused on the deal while the owner stays focused on running the company’s day-to-day operations. An investment banker also provides a level of experience and sophistication when dealing with potential buyers.
MARKET VALUE & TERMS. Many companies are sold to buyers that make many acquisitions. These experienced buyers are accustomed to the standard valuations, terms, and conditions in the marketplace. An experienced advisor can tell the seller what is expected in the marketplace and what provisions the buyer is asking for that are beyond the limits of accepted practice. The investment banker will protect the seller’s interests.
The contracts that document the sale of the company add up to more than 100 pages. The price is in one place on one page of those documents. The remaining terms and conditions are vitally important to the seller. An experienced dealmaker can advise on what is acceptable and what provisions may be detrimental to the seller. The end result is a better sale on better terms.