The Role of an M&A Advisor

Many entrepreneurs believe that the only role of a M&A Advisor is to find buyers for their companies. However, this is only half of the story. M&A Advisors do a lot more than simply locate buyers. Here are just a few of the valuable services they provide to sellers:

1. Work with the owners to evaluate the value of the company.
An advisor will work with the CFO and owners to evaluate historical performance, assist in recasting financial statements, and run valuation models to establish a value for the company. Instead of setting on a single valuation number, an acceptable range may be determined. Compared to other professionals, M&A advisors usually have the most current data on private company valuations. In addition, the terms and structure of the deal may be discussed and agreed upon.

2. Assist in selecting other members of the transaction team
A seller may already have legal and accounting advisors. However, it is important that these advisors have experience in deal making. If the seller's advisors do not have this experience, their M&A advisor can often supply the names of advisors with the necessary experience.

3. Prepare the necessary documentation to market the company
It is critical that the marketing documentation accomplishes two goals. It must create interest in the company, and also provide all of the background information necessary for a prospective buyer to determine whether this company is a strong fit.

4. Identify prospective buyers
It is important to determine what an appropriate buyer would look like financially, strategically, etc. An M&A advisor can help a seller think through what this ideal buyer would look like, while simultaneously assisting him in realizing what his specific goals for the sale are. Honest, realistic goal setting is perhaps one of the most important aspects of the selling process.

5. Develop a marketing plan
An M&A advisor will create marketing strategies to reach the most probable buyers. Methods may include direct mail, print and web-based advertising, emails, and phone calls.

6. Interview, qualify, and inform prospective buyers
Some specific tasks that are included with these responsibilities are obtaining Confidentiality Agreements, setting up site visits with qualified and interested prospects, handling buyer questions and requests for more information, and discussing financing details with prospects. This happens to be the most time-consuming step in the entire sale process -- a step the seller never sees, as it is performed in-house by the M&A advisor.

7. Begin the purchase proposal process
In order to begin the purchase proposal process, M&A advisors will work with prospects on Letters of Intent (LOI), review proposals, coordinate and attend buyer/seller meetings, and assist with facilitating Purchase and Sale discussions.

8. Negotiate details
Once an LOI has been drafted, sale details are negotiated. These details include price, terms, structure of the deal, and the due diligence process. Experienced M&A advisors have been through many transactions and their guidance is invaluable in these negotiations.

9. Manage the due diligence process
In order for a due diligence process to be successful, leases, contracts, and agreements must be reviewed. An experienced M&A advisor will be able to offer suggestions about the timing and processes of these events, which will help to maintain confidentiality during this critical stage of the sale process. An M&A advisor should review drafts of the final purchase agreement and confirm that they are in agreement with previous arrangements.

10. Coordinate closing activities
In order for deals to close successfully, documents must be completed and assigned, and a plan must be determined for how the actual change of ownership will transpire.

This is just a brief overview of some of the tasks that M&A advisors manage during the sale of a company. Through the entire process, the advisor not only monitors those situations that are apparent, but those that lie beneath the surface. These problems could spring up at any time and cause the sale to "crater." Even though hiring an M&A advisor cannot guarantee that your business will sell, it greatly increases the probability of success.