Successful business owners, despite their expertise, may occasionally fall prey to a smooth-talking marketeer in areas outside their knowledge. It is easy to be misled by unscrupulous marketeers offering to sell businesses through various channels, such as magazines or to overseas buyers, often at inflated prices. However, avoiding these pitfalls is also straightforward.
When selling a business after many years of dedication, it is prudent to select the right advisor or broker by following a few simple steps:
1. Eliminate the Marketeers via Research
Conduct online research on the names of any prospective advisory firms along with the name of the local consumer protection agency. In Australia, this is the ACCC.
This simple step will help rule out firms that regulators have already identified as problematic. Surprisingly, some of these firms still operate under different names and continue to deceive business owners daily.
It is frustrating for reputable operators to follow behind a marketeer after a business owner has invested significant amounts of money and more critically, lost 1–2 years before realising nothing will happen.
2. Consult a Trusted Business Advisor
This typically means consulting an accountant, who usually deals with M&A advisory firms in the course of their career.
If they do not know a reputable M&A advisory firm, they can easily tap into their business networks to find one or more.
Almost all clients are referred by their accountant, banker, lawyer, or a trusted colleague.
3. Contact the Firm and Speak to an Advisor
Request information from the firm explaining the size and type of businesses they sell and their methods.
4. Evaluate Key Questions
Consider the following:
• 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 licenses?
• 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 the Target Market
Considering that 95% of businesses have fewer than 10 employees and only 5% are likely to be $3M+ businesses, it is important to choose a firm that handles either the 95% or the 5%, depending on where the business sits. This is crucial as they are marketed in very different ways.
For more information on these key questions, visit this link How to choose an M&A Advisory firm: what to look for
