One of the most important aspects of successful entrepreneurship is controlling costs. So when it comes time to sell your business, it just makes sense that you might worry about the costs of hiring a business broker or M&A advisory firm. It’s a lot of money, after all, and those funds eat directly into your final profits. Talk to any seller who sold their company, though, and odds are good they’ll tell you that the broker added immense value to the process.
In one recent survey of 85 owners who sold their companies with an advisory term, all remarked that the advisor lent additional value to the transaction, with 69% saying they value was significant. Every transaction presents its own unique complexities, and few owners have any experience with selling their business, let alone the sort of extensive experience that the buy-side tea may bring tot he equation. Professional brokerage firms and M&A advisors make the process easier, and remove the imbalance of power.
Eighty-four percent of respondents reported that their final sale price either equaled or exceeded the price the advisor initially quoted. This suggests both that advisors are trustworthy valuation consultants and deliver on their promises to generate value.
According to the study, the most significant sources of additional value included:
· Negotiating the deal. Negotiations can be exhausting, stressful, and costly. A professional team makes the process less overwhelming and more effective.
· Overseeing the sale. Running a business is a full-time job. So is selling one. You can’t do a competent job at both, which means that without the right support at least one of these pursuits will suffer.
· Preparing the business for sale. This includes educating and coaching the seller about the process, preparing for due diligence, helping with valuation, and establishing reasonable sale expectations early on.
· Structuring the transaction. A successful transaction is about more than just the right price. Deal structure significantly influences the final value of the deal.
· Structuring a more professional transaction. Having a professional advisory team lends credibility to the transaction, which may inspire the buyer to offer a higher figure.
· Finding buyers and marketing the company. The deep connections of the right firm can help with locating buyers to whom the seller might otherwise never have access.
A professional advisory firm will add significantly more value than you pay, so don’t nickel and dime yourself into a lower sale price. Seek expert help for a professional, well-run, and more lucrative transaction!
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