You are thinking about selling your company. If so, you’ve undoubtedly been thinking about whether and which corporate finance advisor would be best to involve. Selling a business is a complex project, where a small mistake can lead to major consequences. Good guidance from an advisor increases the chances of a successful sale. In this article, therefore, we list some tips to help you select the right corporate finance advisor for the sale of your business.

Personal connection with your advisor

In addition to numerous important rational criteria, we still discuss the personal connection first. After all, selling a business is both a rational and an emotional process. During this process, trust and a good click are very important. Your corporate finance advisor, in addition to being a process manager, is also your sparring partner who challenges you to make the right decisions in potentially difficult situations.

Corporate finance experience

Many facets come into play during the sale of a business. An experienced corporate finance advisor knows the ropes and is vigilant to the pitfalls that can occur. Get advance information about your advisor’s experience and check whether corporate sales is his or her focus. A financial advisor or consultant who does mergers and acquisitions “on the side” is not the specialist you are looking for.

An experienced corporate finance consultant has references. Ask for some references and call them to hear about the experience before you join together.

Specialist in your segment

Businesses come in all shapes and sizes. From different company sizes to diverse specialists. By extension, the market for corporate finance advisors is also diverse. Therefore, look for an advisor who has extensive experience with the type of business you will be selling. For example, advisors who typically assist medium-sized companies have a different approach than advisors who focus on publicly traded companies

Critical problem solver

When considering selling your business, a good advisor critically checks whether this is the right time. To properly answer this question, you can look at it from two perspectives; the entrepreneur and the business. In an initial exploration, a good advisor will ask numerous questions to see if your business is “sale-ready” and determine what, if anything, needs to be done first.

Clear roadmap

A sound corporate finance advisor follows a tightly directed roadmap. For example, one of the first steps involves collecting, structuring and clarifying all information relevant to the sale. This information is important for making the indicative valuation and preparing a professional sales memorandum for potential buyers. Want to understand all the steps of the sales process? Then download our e-book: 10 steps to a successful sale of your business.

Consultant’s costs

When choosing an advisor who will assist you in selling your business, cost is obviously important. That said, the match between you, your business, your industry and your advisor is more important. That match is important for going through a successful process together and realizing the best price. On balance, a lower sales price at some lower cost will soon be less attractive than a higher sales price at some higher cost. Normally, the costs of a sales process consist of a retainer (based on the effort) and a success-fee (a percentage of the sales price if a transaction comes to fruition).

Secrecy within the sales process

A lot of confidential information is exchanged during a business sale or business acquisition. It is therefore important that your advisor handles this confidentiality carefully and works with a confidentiality agreement, among other things.

Advisor brings all buyers and options into the picture

A great advantage of a good advisor is his or her knowledge of the market. It is impossible to estimate in advance who will end up buying your business. An industry peer? The management? Or a complete unknown you hadn’t thought of yourself? A good advisor explores a long list of all possible candidates identifying different types of potential buyers including; strategic buyers, financial buyers and MBI or MBO candidates.

But other scenarios may come up during the process, such as a pre-exit in cooperation with a financial buyer. In that scenario, you sell part of the shares now and make arrangements with the investor to fully transfer the company at a later date.

Your interests first

A good advisor always puts your interests first. By agreeing on a success-fee, the advisor has an interest in getting the highest possible sales price, in line with your interest as the seller. But there are many more interests for you to consider. Think about conditions such as an earn-out arrangement, a non-compete clause and warranties you need to put in place. Make sure your advisor will look after all your interests, not just the financial ones.

Start with an introduction

In choosing the advisor to involve in the sale of your business, several considerations are therefore important. You would be wise not to take any chances and first meet with several advisors without any obligation. That way, you can make an appropriate choice based on a number of critical questions and the personal click.

The advisors at FBM Corporate Finance

Would you like to know if this is the right time for you to sell your company and get an impression of FBM Corporate Finance’s advisors? Then feel free to make an introductory appointment without obligation. FBM Corporate Finance has guided more than 450 business sale and purchase processes over the past 30 years. Therefore we know the process well and have a broad network for sale and purchase. The advisors of FBM Corporate Finance assist entrepreneurs in a personal way. We gladly make time for an introduction with a cup of good coffee.