This is my last in a series of posts discussing reasons why hiring an investment banker when selling a business can make good economic sense. 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.
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.
PROCESS AND PROFESSIONALISM. Good M&A firms manage the sale process systematically. They have a schedule for documentation, early indications of value, management meetings, letter of intent, due diligence, and closing. The advisor will keep the company on schedule and will use the schedule to manage the relationships with the buyers.
Experienced buyers appreciate the professionalism of an advisor-managed transaction. Buyers can spend up to $200,000 to close a deal. Having an investment banker representing the owner means that the buyers’ time and money will be well spent and the process will go smoothly.
BOTTOM LINE. Company owners are resourceful and committed individuals. There is no question that most company owners can manage the sale of their company to a closing. The question is whether they can commit the time and whether their lack of experience will affect the price and terms.
Working with a professional dealmaker can significantly improve the overall valuation and the terms of the transaction. In addition, the involvement of an experienced dealmaker will significantly improve the likelihood of a successful closing.