Why use a professional M&A advisor when selling your business?

Business owners contemplating a sale of their business sometimes wonder why they should use a professional M&A advisor.  Owners may ask themselves: Why do I need an M&A advisor to sell my business? Can’t I just do it myself and save a significant amount of money in fees?

Owners can frame the decision to use a professional M&A advisor in terms of a cost-benefit analysis. What are the benefits to me? What are the costs to me?

The list of benefits of not using a professional advisor is short.  Avoidance of advisory fees. Advisory fees can run from 2% to 10% of the purchase price depending upon the size of the deal. Some owners find this a big hurdle and feel they can do it themselves and avoid the fees.

Representing yourself in the sale of your business carries direct costs and risk. Owners contemplating selling their business themselves should expect to spend approx. 500 – 1,000 hours of dedicated professional time to the sale process over the course of approximately 6-12 months, while still running their business. They will need to master the techniques and processes of the M&A game, while avoiding the traps and pitfalls that can derail a transaction. Professional M&A advisors have experience from many deal transactions, while most business owners do not. Achieving a successful business sale transaction is not an easy process.

One of the roles experienced M&A advisors play in a successful sale process is the buffer or the intermediary role between buyer and seller. During the sale process, and right up through closing, there will be points of contentious negotiations. These contentious episodes can derail a sale. M&A advisors act as a buffer between the buyer and seller, keeping the sale on track during contentious negotiations.

M&A advisors also drive the transaction to close. The majority of professional M&A fees are earned as success fees. M&A advisors are incentivized to keep the transaction on track and take the lead in driving the deal to a close.

So if you are contemplating selling your business, and considering doing it yourself to avoid the professional advisory fees, be aware that there are direct and indirect costs that can far outweigh the M&A advisor’s fees.