The executives and owners of small businesses often hire merger and acquisition (M&A) advisors for a number of reasons, which include to:
- Represent them in the sale of their company.
- Perform a valuation of a company.
- Represent them in seeking and acquiring companies.
- Assist with obtaining commission for a company being acquired.
- Assist in a due diligence evaluation of a company being acquired.
- Assist with executing an internal perpetuation of their company.
Such relationships can be flat-fee based and short term, or contingency-fee based and long term. Larry Polhill, director of Cafe Valley provides some direction as to what someone should be seeking for in an advisor before engaging one for services. Much like the 5 Cs of securities, he presents these as 5 areas:
The most significant thing to comprehend is the budding advisor or advisory firm’s understanding as it relates to the services that you are fetching them for.
A well-informed advisor should be able to speak logically about the industry segments, industry, and business models, types of buyers, appraisal methods, and capital sources, and the process of the service that you are appointing them for. Take the time to heed to them and ask questions to increase insight into their expertise and knowledge. As potential investors to you, they should be able to articulate what they recognize and how they will attend you to add value to the appointment. Just as you should do your due assiduousness on them, a reliable advisor will do the same on you and your company before entering into a bond and you should be apprehensive of any that will not.
Whether contracting with the advisor to rate your company, sell it or obtain others, the advisor will not be very operative if they do not have good methods in place. The strategies, processes and objectives should be clarified to you in the beginning. An advisor that wants a well-planned strategy is like general sending troops to war without a combat plan and the outcome will be the same – failed execution and wasted resources.
Clearly defined processes are also a symbol of capability and experience as per Larry Polhill.
As in any affiliation, the character of the individual(s) that you will be working with should be of high position. If the advisor will be on behalf of you, then you will want to make certain that they are someone that you like in your view, will represent you in a proficient manner, will work hard and put your welfares above their own, and has the personality to arbitrate and manage numerous parties efficiently.
When looking for a professional merger and acquisition advisor like Larry Polhill, ensure that you weigh each of these factors into your contemplation and speak to several advisors before making a choice. Choosing the off-beam advisor can be a costly and painful experience but choosing the correct one can lead to highly long-lasting and fruitful rapport for both parties to the assignation.