Importance of an M&A Team
Importance of an M&A Team
One venture that entrepreneurs should avoid is the idea that they are qualified to sell their own business. Many times, a successful entrepreneur will figure that if they were successful in building a business they can be successful in selling it. In theory, selling seems like a pretty simple task: all one needs is a buyer. But, there are many tricks and traps in the process. To insure a successful exit with a high valuation and the best terms, it’s necessary to assemble a team, including an M&A advisor.
Too many sellers try to go it alone or with limited help, only to encounter uncontrollable costs related to the process, extensive delays, and unpredictable results. For most entrepreneurs the company that they’ve spent five to forty years building represents a majority of their net worth. It’s difficult to explain why an entrepreneur that has invested so much time and effort into building their company would take a chance on the one opportunity to maximize the value of a sale.
The amount of help that an entrepreneur will need depends on several factors, for example
Does the entrepreneur have a buyer or multiple potential buyers in place?
Is the entrepreneur too busy managing the company’s daily operations to participate actively in negotiations?
Is the entrepreneur effective at marketing the company to outsiders and does he or she have the time and ability to negotiate complex contracts?
Is the entrepreneur capable of valuing the business accurately or, at least, capable of understanding the true value of the company?
How much M&A experience does the Company’s attorney and CPA have?
There are four types of professionals that every seller should strongly consider retaining to form a winning M&A team: An accountant if the entrepreneur’s current CPA has limited to no experience with M&A transactions; a separate tax advisor for the M&A transaction, especially if there are complex or unique tax issues; an attorney with significant M&A experience to prepare and negotiate essential documents, e.g., Non-Disclosure Agreements, Purchase & Sale Agreements, Escrow agreements, etc.; an M&A advisor, especially if the entrepreneur does not have prospective buyers. It should be noted that M&A transactions are very labor intensive and in most cases, entrepreneurs don’t have the time or expertise to handle a company sale. Therefore, a professional M&A advisor is always recommended.
It might seem that hiring multiple professionals would cost the entrepreneur more in the long run, but hiring the right team may ultimately reduce the fees one pays overall. More importantly, the right professionals will make sure that the entrepreneur receives the best possible valuation and terms. At the end of the day, that’s the objective of an entrepreneur’s exit.
Versailles Group is a 29-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures. Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues between US$2 million and US$250 million. Versailles Group has closed transactions in all economic environments, literally around the world. Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987. More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.
For more information, please contact
Donald Grava
Founder and President
617-449-3325
April 1, 2016
