Importance of Hiring M&A Advisor

It is necessary to hire an expert M&A advisor, as an experienced team ensures that companies increase their value and meet all transactional objectives.

FREMONT, CA:In today’s mergers and acquisitions (M&A) market, business owners are approached directly with offers to sell their businesses. With a buyer in hand, many owners charge ahead on their own without the advice of experts. There are myriad pitfalls and unexpectedly costly obstacles during the selling process that will derail a successful exit without the counsel of an experienced advisor.

The M&A transaction process is more complex and causes many sellers to stumble. Unforeseen mistakes during the process can quickly cut down on the profits an owner expects to gain from their sale. Therefore, having an M&A advisor who has navigated the process can pay for itself through cost and time savings on mistakes avoided.

Private Markets Mean No Transparency

The privately held market for middle-market businesses has no centralised marketplace or stock exchange for mid-sized companies, meaning that any merger or acquisition is carried off-market. The problem with this is a lack of market transparency for buyers and sellers when navigating a transaction. Only a little public information is available to help companies accurately determine the value of their businesses. Data used by large companies during the M&A process, like observing comparable transactions concerning other companies in the same industry, does not exist.

Furthermore, the lack of access that business owners have to a pool of qualified buyers is significant, making it difficult for an owner to receive the highest possible price for their company. An M&A advisor has access to market data and a large pool of competitive buyers to help owners maximise their exit price.

The Role of the Law of Supply and Demand

Owners engaging with an investor or acquirer that has contacted them directly are potentially leaving significant profit on the table when selling. Market competition increases an asset’s value. When a buyer knows they are the only one, they will pay the absolute least amount they can, and without access to data, business owners often fall into the trap of accepting that amount. However, when many buyers at the table all compete for attention, they will know that there is a larger competition. This indicates that when demand is high and supply is low, prices increase. An M&A advisor brings many buyers to the table, and they will help companies introduce the options to ensure they find the right partner at the highest possible price and on the best terms.

The additional intricacies of any deal-making process are too immense to count. Changing companies' lives are complex and emotionally taxing. Having an experienced team ensures that organisations maximise value and achieve the outcomes they desire. Therefore, it is worth having an expert partner to guarantee that companies achieve every goal of the transaction.