Should I engage a business broker or M&A professional to sell my business, or should I go at it alone?
Our firm is agnostic as to how a business owner exits their business. The mission is designing and implementing a plan for the exit route (sale to a third party, sale to insiders, transfer to children, ESOP, absentee owner) that will give the owner the best opportunity to attain all their goals (financial, values-based, legacy). That’s a key value-add when engaging our firm.
Often the best exit strategy is a sale to a third-party buyer. That’s when we suggest to our client engaging a transaction intermediary (Business Broker, M&A Professional, Investment Banker), and that’s when they ask the obvious question, “OK, why do I need a transaction intermediary?
In his book, “The Art of Selling Your Business”, John Warrillow provides helpful advice to a business owner who is pondering the question“Should I just go at it alone?”. In Chapter 13, Bidding War, Warrillow shares the following reasons for engaging a transaction intermediary to market and sell your business:
· Create competition: A good intermediary will create competition for your business and ensure that you’re getting a fair price and terms.
· Keep acquirers interested: Typically, it is a challenge to keep potential acquirers interested during a broad auction.
· Provide a buffer: A skilled intermediary will act as a buffer between you and the buyer(s) as the deal progresses and your business is scrutinized by the buyer.
· Be the bad cop: They can be your “bad cop” pushing back on deal points, allowing you to maintain a positive relationship with the buyer.
· Time the reveal: A skilled and experienced intermediary will know how to package and reveal information to keep the maximum number of buyers interested.
· Receive services (mostly) for free: Even though they are expensive, you’re probably better off financially (on a net basis) using a good intermediary.
We highly recommend Warrillow’s book to any owner thinking that a third-party sale is their best route for exit. Our experience has proved his propositions above to be accurate. This is yet another key area in exit planning where a business owner will greatly benefit if conscious of the oft-quoted phrase “I don’t know what I don’t know” and proceed to wisely engage an expert. That owner will significantly increase their chances of avoiding a bad exit and having no regrets.
Invest 12-15 minutes in the FREE ExitMap® Assessment and get a 12-page report scoring you in four key exit planning areas: Finance, Planning, Revenue/Profit, and Operations.