For a mid-sized deal, finance advisers will tend to be the most dependable choice. Investment banks may be willing to come down to the mid-market space, but you run the risk of them pulling out if a larger deal comes along.
Ensure that advisers you mandate are busy
Check the number of deals they have recently closed, the size of the deals and the average timeframe in which they are completed. Ideally, as a rule of thumb, your advisers should be doing ten or more deals a year. This assures that they are familiar with all aspects of the sale process.
Ascertain how busy the advisers are in your sector and what deals they have been involved in to measure their suitability. Assess whether they have a thorough understanding of your industry and of your position within it.
Agree on a list of KPIs
For example, the adviser’s record of selling at valuation prices at or above their target prices and their deal closure success rate. Also, assess what percentage of their transactions is below and above your valuation to work out their aptitude for managing deals in your size bracket. If they are accustomed to working on smaller deals, the task might be beyond them, whereas advisers used bigger deals may not take appropriate interest or provide a good enough service.
Consider how the advisers operate
Ensure that regular contact is maintained, that information will be shared and timely updates on progress will be received. At the beginning of the transaction, agree on any fee sharing with international partners they may have to help facilitate a sale.
Make sure a database is accessible
It’s important that your advisers have access to as big a pool of potential buyers as possible. Advisers with an international network, a detailed database of buyers and a strong research team behind them, are preferable because they are often better informed. This way, they can obtain sector analysis if required when looking for a buyer or seeking to support a high sale multiple.
Make sure you look at the whole team
Ensure that you are satisfied with the junior members of the team as well as the partners. It is important to make sure that partners are not going to take a back seat after initial negotiations and leave all of the work to juniors. However, you must be satisfied that whatever work is passed on to the juniors will be carried out to a high standard.
Evaluate how extensive the service that they are providing is
Will they, for example, coach management and help with planning and strategy? Look at their involvement in other deals to see what their overall input is over the course of the sale process. You want to be sure that your advisers are providing a quality service that is not overpriced in relation to their input.
Ask for references
Find out how highly their service has been rated by previous employers. It is crucial that you hire advisers who have proven time and again that they help to achieve results and take an active involvement in the selling process from start to finish.
Most importantly, you want your advisers to be as focused as you are on closing the deal for a successful partnership to be formed. To discover whether this is the case, you need to understand how their organisation is set up and whether there is a rewards structure that is geared to delivering maximum benefit, only if the sale is completed at a satisfactory price.
Choosing the wrong adviser can be an expensive disruption – if the planned sale does no go ahead, your business’ reputation will be damaged. Any further attempt at a sale will have to be postponed for 12 to 18 months as the whole process will need to be thought through again. Appointing the right adviser can contribute a considerable amount to the smooth running of the sale process and ultimately help secure the best possible price for your business.
Caroline Belcher is a partner at Cavendish Corporate Finance, which specialises purely in advising owners on how to get the best price when selling their businesses and then successfully leading on the deals.
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