Why You Should Hire an Advisor Even When You Receive Inbound Interest
Hiring an advisor to help us with the M&A process even after we had already received an offer from the eventual buyer was the best decision I made in selling the company I had built for 11 years.
My CFO and I spent several weeks talking to bankers and deciding whether we needed to pay someone to help us sell the company. After all, my ideal acquirer had already been looking at us for five months before I thought about hiring an advisor.
To truly get the best possible outcome, I now know with 100% clarity that you need to have multiple parties at the table doing diligence simultaneously. Buyers will offer more if there is competition. Furthermore, it was very helpful having an advisor managing a formal process with a structured timeline. If you handle the process yourself, be prepared to completely stop working on your business for several months – it’s a full-time job, and hiring a professional that knows exactly how to manage the process and maximize the outcome will more than pay for itself.
We were happy to have hired a banker for two main reasons:
They Facilitated a More Competitive Process and Created Urgency:
Arbor identified twice the number of potential acquirers that we had, some of whom we did not previously know. Meeting with many of our competitors in the sale process gave us new and interesting perspectives on our own business. Furthermore, Arbor’s operational experience proved valuable. They helped us effectively position the company to the market and did an excellent job of articulating our story, core capabilities, and value propositions. They made sure we stayed on message, remained consistent, and didn’t say anything that could have hurt us at the negotiation table. In the end, Arbor helped us get more meetings and receive more offers than we would have been able to on our own. Importantly, Arbor also helped us create a sense of urgency, which got the full attention of our target acquirer. As soon as there was a banker driving the process, they become much more responsive.
They Maximized the Offers and Helped Us Close the Best Possible Deal:
The increased competition Arbor created helped us encourage prospective buyers to offer more for our company, ultimately delivering maximum value for our shareholders. In the end, we had five very interested potential buyers who submitted Letters of Intent. As the seller, you really want someone else handling sensitive topics like price. It’s easy to think you can manage the negotiation process yourself, but I learned through this process that negotiation is as much an art as it is a science. I had a front row seat to watch our banker go hand-to-hand with a seasoned corporate development professional, and I was glad I had the right person on my side.
Opening the email on January 5th with the final term sheet from the company I had set my sights on as the ideal acquirer a year earlier was an incredible feeling of accomplishment. But the deal process was far from finished. Final diligence, the purchase agreement negotiation, and other key documents like the shareholder and employment agreements took another five weeks to finalize. There were numerous potential land mines in the field that could have blown the deal up. Arbor’s hard work managing this delicate process helped us close the deal and got us the best possible outcome.
Founder & CEO