How to sell a business: How the best business sale advisors do it – Video

Having the right business sale advisor manage the sale of your business is critical. Here we outline the steps on how the best advisors do it…

Here is a link to a document outlining the steps M&A advisors should take to ensure an optimal outcome for their clients: https://tonybrown.net/advisor-role-checklist/

No matter how good the business and how well prepared the owner is, having the wrong people running your process will affect the outcome.

In this video we’ll run through steps the best business sale advisors take to ensure a smooth process and optimal outcome for their client.

Director, Tony Brown, helps a global audience of Business Owners and Investors understand the in’s and out’s of business sale transactions, and how to prepare themselves and their businesses for the most important transaction in their business lives; through TonyBrown.net.

The video can be viewed here: https://tonybrown.net/how-to-sell-a-business-how-the-best-business-sale-advisors-do-it/

If you found this video helpful, we’d appreciate a share and make sure to leave a comment!

Head over to tonybrown.net/subscribe to register for all of Tony’s new video updates, and be sure to check out the complete ‘How to Sell a Business’ series for plenty of other tips and strategies for improving the outcome of your business sale process.

How to Sell a Business: Choosing a lawyer – Video

The sale of a business is one of the most important events in a business owner’s life.

It must be handled properly and requires a strong team of accountant, M&A advisor and lawyer.

The choice of lawyer can make or break the deal, and can cost a lot of extra money if the deal is bungled.

In this video, we’ll set out some key criteria lawyers should meet before earning the privilege of acting for you on your big transaction.

Director, Tony Brown, helps a global audience of Business Owners and Investors understand the in’s and out’s of business sale transactions, and how to prepare themselves and their businesses for the most important transaction in their business lives; through TonyBrown.net.

The video can be viewed here: https://tonybrown.net/how-to-sell-a-business-choosing-a-lawyer/

If you found this video helpful, we’d appreciate a share and make sure to leave a comment!

Head over to tonybrown.net/subscribe to register for all of Tony’s new video updates, and be sure to check out the complete ‘How to Sell a Business’ series for plenty of other tips and strategies for improving the outcome of your business sale process.

How to sell a business: Exclusive engagement; should you go exclusive, and why? – Video

Why do most M&A advisory firms require exclusive engagement agreements to sell your business? What are the differences over a non-exclusive engagement? And, as a seller, should you agree to it?

These questions are often asked by business owners, and it’s no surprise… The decision must be made early on in the process, but is often critical to a successful outcome.

In this video, we discuss Exclusivity and why most advisors require it, as well as the major factors sellers should consider when making their decision.

Director, Tony Brown, helps a global audience of Business Owners and Investors understand the in’s and out’s of business sale transactions, and how to prepare themselves and their businesses for the most important transaction in their business lives; through TonyBrown.net.

The video can be viewed here: https://tonybrown.net/how-to-sell-a-business-exclusive-engagement-should-you-go-exlusive-and-why/

If you found this video helpful, we’d appreciate a share and make sure to leave a comment!

Head over to tonybrown.net/subscribe to register for all of Tony’s new video updates, and be sure to check out the complete ‘How to Sell a Business’ series for plenty of other tips and strategies for improving the outcome of your business sale process.

5 Steps to choosing the right M&A Advisor (aka Business Broker)

5 Steps to choosing the right M&A Advisor (aka Business Broker)

Successful Business Owners who are smart in their field may have a brain lapse in an area they know very little about and succumb to a smooth talking marketeer.

It is easy for Business Owners to fall foul of unscrupulous marketeers offering to sell their businesses (eg via magazines, to overseas buyers, at inflated prices etc).

It is also easy to avoid the pitfalls.

If you are selling your business after many years of working in and on it, it makes sense to choose the right advisor/broker by taking a few simple steps:

1. Eliminate the marketeers via research

Research online the names of any prospective advisory firms coupled with the name of your local consumer protection agency. In Australia, it is the ‘accc’.

This simple step alone will rule out the firms the regulators have already caught up with!

You’d be surprised to know that they still operate, some with changed names, and STILL catch people EVERY DAY!

It’s exasperating to reputable operators to have to follow behind a marketeer after the Business Owner has sunk $000’s into a black hole and, even more critically, has lost 1–2 years before they realise nothing is going to happen!

2. Ask your trusted business advisor

This normally means your accountant.  They are usually dealing with M&A advisory firms in the course of their careers advising their clients. If they don’t know a reputable M&A advisory firm, they can easily tap into their business networks to find one or more.

Almost all of our clients are referred by their accountant, banker, lawyer or a trusted colleague.

3. Contact the firm and talk to an advisor 

Ask them to send their information through explaining what size and type of businesses they sell and how they do it.

4. Look for answers to these key questions:

  • Does the firm have a record of successful transactions of comparable size?
  • Are the key advisors suitably qualified and experienced?
  • Will the advisor personally oversee the project?
  • Does the firm understand, respect and manage client confidentiality?
  • Does the firm hold the appropriate licences?
  • How does the firm source target purchasers?
  • Will the firm professionally present the business opportunity?
  • How well does the firm communicate with clients?
  • How well does the firm cooperate with other professional advisors?
  • Will the firm provide an indicative valuation before the client commits?
  • Does the firm manage the full process to completion?

5.  Understand your target market

Bearing in mind that 95% of businesses have fewer than 10 employees and only 5% are likely to be $M+ businesses, you need to choose a firm that handles either the 95% or the 5%, depending on where your own business sits. This is very important as they are marketed in very different ways.

Information about these key questions can be found here: http://divestmergeacquire.com/articles/checklist-for-choosing-an-ma-advisory-firm/

Please feel welcome to add your comments and/or share with your colleagues.

What sets Divest Merge Acquire

What sets Divest Merge Acquire – Supertrac apart in M&A

Divest Merge Acquire – Supertrac’s transaction advisory network is at the forefront nationally in the sale and acquisition of businesses in the $1M-$50M+ range.

Divest Merge Acquire – Supertrac’s direct marketing system is so effective that it is utilised by other M&A advisory firms under a generic brand, MNA Direct. It is being used to market going concern businesses and impaired assets, as well as acquisition searches.

This high level of utilisation ensures information is constantly being updated for investor preferences and requirements.

Here is a summary of Divest Merge Acquire – Supertrac’s key advantages.

1. UNRIVALLED MARKETING RESOURCE

ACTIVE M&A DATABASE – THE SPECIFICATION

  • Developed to define market (Aus & NZ business with > 10 employees);
  • Contains 190,000 companies, individuals and contacts;
  • Actively maintained and current;
  • Key data on each company and individual (across 90+ active fields and hundreds of unique attributes);
  • Categorised by relevant industry SIC Codes;
  • Online accumulated history and investment parameters for active purchasers.

Advantages

  • Readily searchable and actionable contact points by particular industries, regions or groups;
  • Current, relevant data available now;
  • Ability to readily determine each target organisation’s M&A aspirations;
  • Unprecedented database accuracy and usefulness which increases with regular activity.

EFFECTIVE DIRECT MARKETING PROCESS

  • Client marketing process includes sending letters or emails to 1,000-3,000 companies targeted by industry (SIC classification);
  • Marketing activities deliver an average of 40 targeted prospective purchasers for each business opportunity taken to market.

Advantages

  • Dramatically increases the likelihood of success and of competition among bidders;
  • Accounts for more than 80% of all transactions completed by Divest Merge Acquire – Supertrac.

BRAND RECOGNITION

  • 17,000+ subscribers to Divest Merge Acquire – Supertrac’s monthly e-newsletter;
  • 1,800+ connections/followers on Twitter and Linkedin; and growing;
  • Regular targeted and general mailouts and emails to database.

Advantages

  • Divest Merge Acquire – Supertrac is recognised as a leader in its M&A market;
  • Divest Merge Acquire – Supertrac’s team has keen market focus and proven ability to get in front and stay there.

2. PROFESSIONAL NETWORK

TEAM OF EXPERIENCED AND QUALIFIED ADVISORS

  • Experienced team of advisors throughout Australia;
  • Chartered Accountants and industry executives;
  • Dedicated marketing and administration support teams.

Advantages

  • Strong networks with professional buyer/seller groups;
  • Accumulated skills and experience across a broad range of industry sectors;
  • Ability to optimise all aspects of the outcome for clients.

STRONG ACTIVE REFERRAL BASE

  • Many active referrors from professional services firms: accountants, lawyers, financiers, finance brokers, and insurers; former clients, prospective purchasers etc.

Advantages

  • Referrals from accountants, lawyers, financiers and insurers;
  • Creates a secondary network to match investors and prospective buyers and sellers of businesses;
  • Affirms the quality of Divest Merge Acquire – Supertrac’s professional services.

3. REPORTING AND SYSTEMS DOCUMENTED PROCESSES

  • Online tracking of client projects;
  • Documented processes for divestments, acquisitions and capital raising;
  • Approx. 145 activities grouped into 10 stages for each process;
  • Developed from best practices accumulated over 14 year period.

Advantages

  • High degree of client service and higher quality service delivery;
  • Leverage – steps can be completed by admin/marketing team members;
  • High efficiency of service delivery.

DETAILED REPORTING AND CLIENT MANAGEMENT

  • Online sign off for work done by responsible team member;
  • Status of work flow and deliverables can be reviewed online at any time by team members;
  • Documentation of deliverables and work retained and archived;
  • User manual (including online access for Member Firms);
  • Detailed reporting to clients of project status – options of online or periodic eg weekly.

Advantages

  • Effective client project management and client service;
  • Ease of communication of status with client;
  • Closed file documentation on all engagements is retained for risk control but available as a learning tool (eg. industry knowledge, lessons learned);
  • High client awareness, confidence and retention.

EXTENSIVE TEMPLATES AND PROCEDURES

  • Online user manual containing more than 1,500 procedures, autotexts, templates and checklists.

Advantages

  • Efficient, reliable and consistent execution of processes and activities.

Please feel welcome to add your comments and/or share with your colleagues.

How to choose an M&A Advisory firm

How to choose an M&A Advisory firm: What to look for.

How do you select an M&A advisory firm for you, a client or colleague?
When a client or colleague asks for advice on selling their business or sourcing acquisition targets, you would normally help them by referring them to those you know are best placed to assist.

Without prior experience in the area, referring them on to a suitable advisory firm that will best meet their needs can be quite difficult!

This article contains the key questions you need to ask of any M&A advisory firm.

EXPERIENCE

Does the firm have a record of successful transactions of comparable size?

  • What is the value of total transactions the firm has advised on? This should preferably run into the hundreds of millions of dollars.
  • What is the target enterprise value range of clients the firm has advised on? The largest? The smallest? What is the average transaction value?

CREDIBILITY

Are the key advisors suitably qualified and experienced?

  • Does the advisory team include qualified, expert professionals with a wealth of experience in corporate advisory, business management and transactions?

PROJECT MANAGEMENT

Will the advisors personally oversee the project?

  • Will at least one of the firm’s advisors be involved with the project, ensuring personal attention and backup?

CONFIDENTIALITY

Does the firm understand, respect and manage client confidentiality?

As precautions to minimise the risk to the business:

  • Are processes conducted on a confidential basis, where discretion and sensitivity in marketing and negotiations are required to minimise risk and disruption to the business?
  • Are prospective purchasers thoroughly qualified, are they required to complete a confidentiality agreement and investor registration?
  • Is client approval sought before every purchaser receives further information about the business?
  • How does the firm manage these processes? Is it done systematically, so all team members involved on the project must adhere to the procedure?

REGULATORY

Does the firm hold the appropriate licences?

  • Does the firm and its advisors hold appropriate licences?

MARKETING RESOURCES

How does the firm source target purchasers?

  • What marketing resources does the firm have access to?
  • What ongoing costs will you be expected to contribute?
  • How will the firm contact target purchasers?
  • How will the firm make non-target purchasers aware of the opportunity?

PRESENTATION

Will the firm professionally present the business opportunity?

  • Does the firm prepare a sophisticated and comprehensive Information Memorandum (IM)?
  • This is a pivotal element to marketing a business, as it is designed to provide purchasers and their advisors with sufficient information to make an initial assessment, as well as build their confidence to proceed with the acquisition.
  • Does the firm, as part of its process, analyse the business for its strengths and potential, and make recommendations on any aspects which could be improved to maximise the perceived value of the business to interested parties?
  • Does the firm require the client’s written approval of the content of the IM?

COMMUNICATION

How well does the firm communicate with clients?

  • Does the firm provide high-levels of communication and advice throughout the sale process so clients can make informed decisions?
  • Is the firm fast acting and highly responsive in communication with clients and their other advisors ensuring a smooth process to completion?
  • Does the firm document all correspondence and events regarding the sale?
  • Does the firm provide regular written and verbal reports of activity and progress, including details and status of every prospective purchaser?

COOPERATION

How well does the firm cooperate with other professional advisors?

  • Are the firm’s advisors professionally qualified and do they work seamlessly with clients’ other advisors?

PRELIMINARY VALUATION

Will the firm provide an indicative valuation before the client commits?

  • Does the firm provide an indicative valuation of each business before a client commits to proceed to market?

PROCESS TO COMPLETION

Does the firm manage the full process to completion?

How well does the firm manage the entire process, from start to completion?

  • Qualifying Prospective Purchasers, to minimise risk and lost time.
    • Do they assess purchasers’ ability to complete the acquisition, and consult clients every step of the way?
  • Questions:
    • Do they coordinate the question and answer process to maintain protocols, confidentiality, accuracy and documentation, as well as provide feedback and advice?
  • Inspections:
    • Do they coordinate and attend inspections and other meetings and make recommendations?
  • Expressions of Interest evaluation process. Do they:
    • Assess and rank offers?
  • Assess capacity to finance the transaction?
  • Assess the commitment and ability of interested parties to complete the transaction? Assess strategic fit?
  • Negotiation and Completion. Do they:
    • Capitalise on competitive tension?
  • Focus on value drivers to improve price negotiations?
  • Liaise with legal and accounting advisors?
  • Assist with negotiating warranties, indemnities and guarantees?
  • Assist with Letter of Intent or Heads of Agreement as appropriate?
  • Due Diligence:
    • Do they co-ordinate and facilitate the due diligence process, including establishing and managing virtual data rooms?
  • Do they understand how the various components of working capital requirements interact, and can they map these out in detail?
  • Contract terms. Do they:
    • Understand the various key components and differences between share and asset transactions?
  • Where appropriate, brief or provide the lawyer with a pro-forma Contract of Sale to save time and cost?
  • Negotiate the commercial aspects of the contract of sale?

So how does Divest Merge Acquire – Supertrac Measure up?

Divest Merge Acquire – Supertrac is an M&A advisory firm that meets or exceeds all the above criteria.
Here are some examples of how:

  • Most of Divest Merge Acquire – Supertrac’s transactions are in the $1M-$50M range.
  • Divest Merge Acquire – Supertrac’s team consists of qualified, expert professionals with a wealth of experience in corporate advisory, business management and transactions. They are complemented by an experienced, capable team responsible for the distribution of client marketing material and screening of initial responses.
  • Divest Merge Acquire – Supertrac and its Member Firms hold the necessary licence appropriate to their home State.
  • Divest Merge Acquire – Supertrac’s database is the primary source of prospective target firms. The database covers all organisations in Australia with more than 10 employees, and corporate, private and international investors, allowing it to readily identify and target prospective purchasers. It is understood to be one of the best sources of business intelligence available and is a key point of difference.
  • 82% of purchasers for businesses have been sourced from Divest Merge Acquire – Supertrac’s database or Divest Merge Acquire – Supertrac’s website.  The remaining 18% of purchasers have been sourced by other means including other websites on which Divest Merge Acquire – Supertrac markets opportunities.
  • Divest Merge Acquire – Supertrac prefers to provide an indicative valuation of each business before a client commits to proceed to market.
  • Divest Merge Acquire – Supertrac manages the entire process, from start to completion.

FIND OUT MORE

For insight into some common marketing approaches, refer to the following article:

Please feel welcome to add your comments and/or share with your colleagues.

Choosing an M&A advisory firm

Choosing an M&A advisory firm – An advisor checklist

Selecting an advisor for an event as significant as a business sale can often be a difficult decision. To assist in the process, we’ve put together a suggested checklist to adopt when conducting your ‘due diligence’ on an M&A advisor, based on some of the key questions we get asked routinely. Divest Merge Acquire – Supertrac’s credentials are included as a benchmark for comparison.

M&A REFERRAL CHECKLIST:

1. Experience
Does the firm have a record of successful transactions of comparable size?

  • Divest Merge Acquire – Supertrac has provided advice on clients’ businesses totalling more than $550M.
  • Most of Divest Merge Acquire – Supertrac’s transactions are in the $1-$50M+ range and the average transaction value is around $5-10M.
  • Divest Merge Acquire – Supertrac is regularly appointed by private equity groups, local and overseas listed companies looking for acquisition targets in specific industries.
2. Credibility
Are the key advisors suitably qualified and experienced?
  • Divest Merge Acquire – Supertrac’s team of advisors consists of Chartered Accountants and expert Industry Professionals with a wealth of experience in corporate advisory, business management and transactions.
  • Our advisors are complemented by an experienced, capable team responsible for the distribution of client marketing material and screening of initial responses.

3. Management
Will the advisors personally oversee the project?

  • At least two of Divest Merge Acquire – Supertrac’s advisors are involved with each project, ensuring personal attention and backup.

4. Confidentiality
Does the firm understand and respect client confidentiality?

  • Divest Merge Acquire – Supertrac manages transactions under strict confidentiality, with the utmost discretion and sensitivity in marketing and negotiations to minimise risk and disruption to the business.
  • Prospective purchasers (or buyers) are thoroughly qualified through a strict process. Before a clients identity is released, an investor registration form is completed along with a Confidentiality Agreement. Our team then research each respondent and prepare a summary report for our clients review and approval. If approved, the clients identity is released and an Information Memorandum is provided. These precautions minimise the risk to the business.

5. Regulatory
Does the firm hold the appropriate licences?

  • Divest Merge Acquire – Supertrac holds an Australian Financial Services Licence (AFSL). This confirms Divest Merge Acquire – Supertrac’s status as a quality service provider and underlines its commitment to deliver the highest possible standard of advice and service.
  • Divest Merge Acquire – Supertrac’s Member Firms are either authorised representatives or hold equivalent licences appropriate to their home State.

6. Marketing Resources
Where does the firm source most purchasers from?

  • Divest Merge Acquire – Supertrac’s database covers all organisations in Australia with more than 10 employees, and corporate, private and international investors, stratified by Industry SIC codes. This allows us to readily identify and target prospective purchasers among key industry groups and demographics. More than $3 million has been invested in this asset alone. It is understood to be one of the best sources of business intelligence available and is a key point of difference.
  • More than 80% of purchasers are either already on Divest Merge Acquire – Supertrac’s database or referred by those who are, including accountants, former clients, lawyers and financiers. The remaining purchasers come primarily from Divest Merge Acquire – Supertrac’s and other websites.

7. Presentation
Will the firm professionally present the business opportunity?

  • Supertrac prepares a sophisticated and comprehensive Information Memorandum (IM). This is a pivotal element to marketing a business, as it is designed to provide purchasers and their advisors with sufficient information to make an initial assessment, as well as build their confidence to proceed with the acquisition.
  • As part of the process, we analyse our client’s business for its strengths and potential, and make recommendations on any aspects which could be improved to maximise the perceived value of the business to interested parties.
  • The IM requires the client’s written approval prior to release.
  • The IM is issued to prospective purchasers only after they have signed a Confidentiality Agreement, completed an Investor Registration and have been approved by our client.

8. Communication
How well does the firm communicate with clients?

  • Divest Merge Acquire – Supertrac provides high-level communication and advice throughout the sale process so clients can make informed decisions.
  • Divest Merge Acquire – Supertrac’s fast acting and highly responsive communication with clients and their other advisors ensures a smooth process to completion.
  • Divest Merge Acquire – Supertrac maintains documentation of key events regarding the sale.
  • We provide regular written and verbal reports of activity and progress, including details and status of every prospective purchaser.

9. Cooperation

Can they work with us and other professional advisors?

  • Divest Merge Acquire – Supertrac’s advisors are professionally qualified and work seamlessly with clients’ other advisors
10. Preliminary Valuation
Will the firm provide an indication of expected market valuation before the client commits?

  • Divest Merge Acquire – Supertrac prefers to provide an indicative valuation of each business before a client commits to proceed to market.
Easy to find out more?
  • Divest Merge Acquire – Supertrac can provide a Divestment Proposal containing information to assist prospective clients understand more about the process.
  • Divest Merge Acquire – Supertrac’s advisors are willing to meet both prospective clients and their advisors to discuss the process or specifics of their business.

Can a clients accountants/lawyers or other advisors become involved in the process?

  • Divest Merge Acquire – Supertrac offers a range of partnering options as an opportunity to become more involved in the sale or acquisition process, or in preparing your clients’ businesses for sale. Checkout the ‘partnering options’ page on our website.

11. Process to Completion
Does the firm manage the full process to completion?

Divest Merge Acquire – Supertrac manages the entire process, from start to completion.

  • Qualifying Prospective Purchasers
    • We qualify prospective purchasers to minimise risk and lost time. We assess their ability to complete the acquisition and consult clients on a regular basis.
  • Questions
    • We coordinate the question and answer process to maintain protocols, confidentiality, accuracy and documentation, as well as provide feedback and advice.
  • Inspections
    • We coordinate and attend inspections and other meetings and make recommendations.
  • Expressions of Interest are evaluated as follows:
    • Assessment and ranking of offers
  • Finance sourcing
  • Assess the ability of interested parties to complete the transaction
  • Strategic fit
  • Negotiation and Completion
    • Capitalise on competitive tension
  • Focus on value drivers to improve price negotiations
  • Liaison with legal and accounting advisors
  • Assistance throughout the Due Diligence process
  • Assistance with warranties, indemnities and guarantees
  • Assistance with Letter of Intent or Heads of Agreement as appropriate
  • Due Diligence
    • Co-ordinate and facilitate the due diligence process
  • Setup and management of in-house online datarooms
  • Contract
    • Where appropriate, provide the lawyer with a pro-forma Contract of Sale to save time and cost.
  • Negotiate the commercial aspects of the contract of sale.

Please feel welcome to add your comments and/or share with your colleagues.

About your advisors

About your advisors – a fireside chat

The stakeholders in a business sale/purchase transaction have differing needs and concerns. You need to understand these so you can make correct decisions. With transactions involving individuals who may have never before purchased or sold a business, a fireside chat is often useful to explain how the process works. Here are some observations that are covered in the fireside chat.

Your Needs
Normally, buyers and sellers have an overriding need to achieve an outcome, and would prefer that this be done as safely as possible. Typically, you employ your lawyer and accountant to advise you on how to make the transaction as safe as possible, to optimise the structure of the transaction for tax and other factors, and to help bring about the deal.

The agent may be expected to find the buyer/seller and to facilitate the transaction including identifying and qualifying purchasers, coordinate discussions, manage negotiations and achieve a result. This aligns their goals with those of their client, who also has an overriding wish to achieve the outcome, providing the degree of commercial risk is acceptable. The seller and buyer usually have more to gain from the sale than all their advisors, so inevitable compromises are made to reach a workable (win-win) outcome.

Basis of Appointment of your Advisors
How your advisors are paid encourages them to act in an appropriate and predictable way; Lawyers and accountants normally charge for the time they spend on a project, not according to the outcome. This is logical as you want their assistance in making the transaction as safe and well structured as possible.

Brokers/agents are usually appointed and incentivised by either buyer or seller to achieve a specific outcome and are paid according to the result. It is natural to expect they will be keen to succeed. The key is to ensure you are working with an agent/advisor who looks for win-win and whose business relies heavily on referrals from clients, buyers and their advisors, and who takes a long-term view of all relationships. Divest Merge Acquire – Supertrac does, as the ‘Testimonials’ at divestmergeacquire.com confirm.

Lawyers, for both buyer and seller, must protect you, themselves and their business. This is best done by pointing out all the possible pitfalls in the transaction and, where appropriate, advise against proceeding if this is likely to be compromised. This is logical and reasonable in today’s litigious world, where lawyers in particular, have become both the perpetrators of, and also the victims of, this higher risk world.

They want to protect you, the client, so you are less likely to turn on them if something goes wrong later. Note – they do not have an overriding need to see a transaction take place, as this theoretically increases their risk. Most lawyers would prefer to act for the seller rather than the buyer, as there is inherently less risk to a seller in a business transaction.

Accountants are in a similar position to lawyers regarding risk, although they are generally closer to their clients because of more regular consultation on ongoing accounting and related business activities. They may have known their client for many years and assisted with how the business has developed. They will naturally want to see the best possible outcome for their client.

This can manifest itself in an optimistic valuation for a selling client, and a conservative valuation for a buyer. While both positions can be justified, they may result in unrealistic expectations for their clients.

Make it clear to your advisors what you expect of them
There is no such thing as a perfect contract. Usually making it perfect for one party will ruin it for the other. Communication, motivation and common sense are required for an outcome to be possible. The best accountants and lawyers do much more than point out problems, which is a relatively easy thing to do. The most valuable advisors point out the problems and then offer solutions!

We have heard stories about lawyers prolonging disputes to increase their fees; and accountants obstructing transactions to retain their clients. We rarely see any evidence of these selfish motives at all. The vast majority of professional advisors act in good faith and with appropriate competence.

Focus on the outcome
Always keep your focus on the long term goal. All stakeholders to the transaction, for both buyer and seller, share a strong desire to be able to look back and see a good overall result for everyone- buyer, seller, employees, financiers, lawyers, accountants, agents etc.

Staying focussed on the outcome will help keep your perspective when negotiating individual aspects of the transaction and counter the tendency to be drawn into point-scoring during the negotiation, which makes you lose sight of the big picture.

Some further tips for navigating transaction issues:
Practically speaking, there is no such thing as a risk-free transaction. People buying a business are knowingly entering into the world of commercial risk. Those selling already live every day with business risk. The sale transaction is no different to all other transactions the parties deal with.

If you ask your lawyer “should I do X?” their default response will be “NO”. Your lawyer has nowhere to go here but ‘No’ unless this is a risk free outcome. If you ask them “If I do X, then what might the consequences be? This gives your lawyer the opportunity to provide
some useful commercial advice.

You could also ask what they would do if they were in your shoes. Lawyers are commercially astute, so give them the opportunity to help you without the risk of you turning on them if it doesn’t work out. In many situations, lawyers may write to their client advising them not to proceed with a particular situation. They would do this to protect you and themselves, but may fully expect you will proceed anyway.

The interesting thing is that, both the buyer and seller are obtaining advice according to these same guidelines. It is therefore likely that, with each lawyer striving to make the transaction ‘risk-free’ to themselves and their respective clients, the default outcome is for no transaction to occur!

In the end, your accountant and lawyer know that you will make a commercial decision. They expect you to and would be surprised if you pulled back from an attractive deal, even if it contains commercial risk. Generally, the more experienced at business you are, the better you can discern and rationalise the advice you receive. Seasoned business people who know the ropes often relegate advisors to less prominent roles according to their specialised expertise. Inexperienced buyers and sellers will tend to rely entirely on their advisors. In some cases, the accountant and lawyer find themselves being relied on for commercial advice where they may not be qualified. This may increase their risk and therefore force them to be even more conservative.

Please feel welcome to add your comments and/or share with your colleagues.