When the time is right, and you and your business are prepared, you will need a team of experts to assist you with the sale process. These include a sell-side intermediary (or depending on the size of your company, perhaps a business broker on the smaller end or an investment banker on the larger end), an M&A sell-side accounting firm, an M&A attorney, your tax advisor, your wealth advisor. Just as you choose an orthopedic surgeon and not your family doctor to help with a knee replacement, you need to select Merger and Acquisition experts. Your day-to-day business attorney or ongoing accounting relationship are not M&A advisors.While you may be tempted to use your current accountant and attorney, you should resist the temptation. Expertise in a very specific discipline, M&A, is warranted.
Keep in mind that you will need to do your best to ensure alignment of interests across your deal team. How are they compensated (by the hour?), are they aligned with your vision of the desired outcomes, are they working in concert and in tandem with one another?
Personality matters. You will be working in close proximity with this team, under substantial stress and possibly time pressure, as well. If it does not seem like a fit at the outset, you should move along and find another advisor because it will only get worse over time. Good advisors are patient, well-mannered and able to absorb the shocks and stressors of the transaction process. They are also well-connected, willing to ask for help and to seek outside advice.
If you are having trouble finding one member of your team, ask the other members whom they have seen work well with, and for, other clients. Triangulate their advice. Ask other owners who have already sold their businesses, whom they would work with again.
With regard to brokers/intermediaries/investment bankers, you are looking not simply for financial acumen (that is table stakes), but for a combination of marketing prowess, M&A experience, and an ability to serve as a source of emotional support throughout the process. Characteristics you should be looking for include:
As you investigate potential brokers/intermediaries/investment bankers to become a member of your M&A team, you should ask to see examples of their output that they use to market business for sale (Teasers and CIMs). How visually appealing are the documents? Are they well written? Are they compelling – do they make you want to invest in the businesses they represented? How professional do they seem, for sophisticated readers?
You should also ask to see a list of transactions for which they served as an M&A Advisor (how long is it)? You should also ask how many deals they have been working on recently and what their pipeline looks like. While it may be compelling to choose a representative who has a clean slate and can focus on you, or to choose one that is in very high demand, you may be better off with one who is neither highly available (indicating they may not be particularly strong) nor extremely busy (meaning they could not focus on you).
It may also behoove you to go into some degree of detail asking about their marketing process. How robust is their research and development of target lists? How much effort do they put forth into preparing attractive and compelling marketing materials? How impressive are their past Teasers and CIMs to you?
Ask about their take on best practices in negotiating transactions. Ask about successes and failures in negotiations. Ask about who some of the best negotiators they have seen on the other side are, and why? What have they learned from those experiences? You are striving to assess their ability to learn, develop, grow and improve as negotiators – a skill that is often a function of experience and an ability to learn from mistakes.
You will also want to ask for references of potential transaction advisors. More specifically, you are looking for answers to the following questions: