Published on May 30, 2023
If this is the first time flying a plane, would you want to have an instructor sitting next to you, or would you be fine with only your phone watching an instructional video on YouTube? If you are considering selling your business, you may want to work with a sell-side advisor to help you navigate the process and achieve a successful outcome. A sell-side advisor can help you identify potential buyers, negotiate with interested parties, and structure a deal that meets your financial and strategic goals. If you decide that having the person sit next to you in the cockpit is a good idea; here are some questions you might want to ask a sell-side advisor before working with them:
What is your experience in the sell-side process, and what types of deals have you worked on in the past?
The first question you should ask a sell-side advisor is about their experience in the sell-side process. It is important to work with an advisor who has a proven track record of success in selling companies, particularly in your industry or a related field. Ask the advisor to provide examples of past deals they have worked on, and to describe the nature of those deals, including the size, structure, and goals of the sales.
In addition, ask the advisor to describe their role in those deals, and the specific tasks they performed. For example, did they identify potential buyers, conduct due diligence, negotiate with interested parties or create the marketing materials? By understanding the advisor's experience and expertise in the sell-side process, you can get a better sense of their capabilities and whether they are a good fit for your needs.
What is your process for identifying and approaching potential buyers, and how do you assess their fit with our company?
Next set of questions to ask could center around a sell-side advisor process for identifying and approaching potential buyers. A good advisor should have a rigorous and systematic approach to identifying potential buyers, based on a deep understanding of your company's strengths, weaknesses, and strategic goals, as well as the market and competitive landscape.
Ask the advisor to describe their process for identifying potential buyers, including the criteria they use to evaluate the buyer's fit with your company. For example, do they consider factors such as the buyer's financial resources, experience in your industry, strategic objectives, or cultural fit with your company? How do they assess the buyer's ability to complete the sale, and the risks and challenges of the sale?
In addition, ask the advisor to describe their approach to negotiations with potential buyers, and how they work to build a strong rapport with interested parties. By understanding the advisor's approach to identifying and approaching potential buyers, you can ensure that they will be thorough and effective in their efforts to sell your company.
How do you value a company, and what factors do you consider in determining the sale price?
Valuing a company is a complex and nuanced process, and it is important to work with a sell-side advisor who has a deep understanding of the factors that influence company valuations. Ask the advisor to describe their approach to valuing a company, and the factors they consider in determining the sale price.
For example, do they consider factors such as the company's financial performance, growth potential, intellectual property, or competitive landscape? How do they weigh different factors to arrive at a fair and reasonable sale price? By understanding the advisor's approach to valuing a company, you can get a better sense of the potential sale price for your company, and the factors that will influence that price.
How do you manage the due diligence process, and what types of issues have you encountered in the past?
Due diligence is a critical step in the sell-side process, and involves a thorough assessment of your company's financial, legal, operational, strategic performance, IT and more (please see past articles where we dive into the steps in the due diligence process). Due diligence can be a complex and time-consuming process, and it is important to work with a sell-side advisor who has experience managing this process effectively.
Ask the advisor to describe their approach to due diligence, and the types of issues they have encountered in the past. For example, have they encountered challenges with financial reporting, legal, discovered “skeletons in the closet” ...
In conclusion, just like the importance of having the right co-pilot or pilot instructor when flying a plane, the right sell-side advisor is critical and can significantly impact the success of your business sale. By asking the right questions, you can gain valuable insights into the advisor's experience, expertise, and approach to the transaction process. It is essential to take the time to evaluate potential advisors carefully and select the one that aligns best with your goals and values not to mention in the question process you will be able to determine if that person is someone that you would be happy with spending countless hours with during this process. With the help of a trusted sell-side advisor, you can navigate the complex sale process with confidence and achieve a successful outcome that maximizes the value of your business so that you and your family will enjoy the fruits of your labor.
*** The content is not intended to provide legal, financial or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional(s) before entering into any M&A transaction. ***
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Shawn Flynn is a Principal at Global Capital Markets, a premier middle-market investment bank with a global presence. Shawn has expertise in mergers and acquisitions, capital markets, financial restructuring, and secondaries. He speaks Mandarin and is the host of the award-winning Podcast The Silicon Valley Podcast. Connect with him on LinkedIn.
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About Global Capital
As a middle market investment banking boutique, Global Capital provides mergers and acquisition advisory services, access to corporate debt and equity capital, and strategic advisory services to successful middle market companies. For over twenty five years, our team has offered companies a unique blend of sophisticated financial expertise and access to the global marketplace of buyers, sellers and financiers.
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