Restructuring your corporation is not a task for the faint of heart. In fact, over 50% of M&A deals fail.
While an M&A deal can be a great step for your business, you may not know how to navigate the intricacies of merging with another company.
There’s no reason to be without an M&A adviser. While it’s unwise to consider getting acquired on your own, many business owners consider it.
Perhaps you’ve already been through the process of selling your business to another party and may assume you can complete a new M&A deal yourself. Maybe you believe that selling a small company is simple enough to do without the professional advice of a banker.
Before jumping into the complexities of M&A yourself, you may want to be aware of the 7 major benefits of having an M&A adviser on your side:
1. Knowledge of market trends
As a business owner, you know your industry inside and out. This doesn’t always translate into an intimate understanding of market trends and valuations within your industry, however. Even if you are well-acquainted with market trends, having the perspective of a financial expert outside of your company can do wonders for any M&A deal.
2. Higher valuation
As an expert in their field, M&A advisers can help you land at a better valuation. A good M&A adviser will search endlessly to find a company with a very serious interest in your company. In the best deals, the purchase price isn’t purely academic. Ideally, a company interested in acquiring your business will feel strongly about the prospect of purchasing your business. An M&A adviser will be able to use his or her connections to find such a match.
3. Expert negotiation
No one wants to play the bad guy in negotiations. Putting pressure on the other party can be disastrous for your deal and for future business relations. With an M&A adviser, you can circumvent the unpleasantness of hardline negotiations without damaging your relationships, while still pushing for a better deal.
4. Easier navigation
According to Generational Equity, you need to plan on spending at least one thousand hours of your own time over a period of 9 to eighteen months to close a M&A deal. In addition to the incredible amount of work you’ll be burdened with, you’ll lack a go-between for interested parties, harming your legitimacy.
An often overlooked benefit of having an M&A adviser is remaining anonymous in your desire to strike an M&A deal. Without an M&A adviser to test the market for you, you’ll likely be forced to make your M&A intentions known from the get-go.
6. Increased competitiveness
Public companies often get a large number of bids. The same cannot be said for private companies, however. An M&A adviser can help privately-held companies increase their bargaining power by increasing the number of bids they receive. This increased competition will help you garner more sway in negotiations and land at a favorable purchasing price.
7. Peace of mind
You shouldn’t be saddled with two jobs when looking to close on an acceptable M&A deal. Managing your business is enough. Engaging in two roles -- proprietor and interim financial consultant -- is brutally taxing and pointlessly messy. Hiring a trusted M&A adviser to handle many of the major decisions, navigate the complexities, and steer negotiations will offer you much-needed peace of mind.
Successful business dealings hinge upon individuals well-versed in their fields. You need knowledgeable professionals in order to get a desirable result. In the case of M&A, you’ll need an experienced M&A adviser to help you through the ups and downs of acquisitions.
M&A advisers add legitimacy to your dealings as they have knowledge of market trends and valuations. In addition, they’re indispensable as negotiators, provide insightful advice as an advocate for your company, and help you retain anonymity as you search for acquirers. Having a financial expert in your corner will also help you increase competitiveness, garnering your company more sway in business dealings. And, perhaps most importantly, hiring a trusted M&A adviser will provide you with peace of mind as much of the guesswork of M&A will be eliminated and a great deal of your free time spared.
Paul Sciglar is a columnist interested in international policies and economic affairs. Certified Accountant with broad experience in strategic analysis, FP&A, investment banking, and investment management. You may connect with him on Twitter.
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