So, after careful consideration and planning you think the time is right to sell your business. A friend or associate has recommended a professional they know of and you are going to interview them for the job. Your goal is to get the best possible representation. While some business brokers do a great job servicing smaller companies that are valued at less than $2 million, companies with a higher enterprise value will benefit the most from selecting an M&A advisor.
Business brokers are primarily focused on business enterprises that are relatively easy to assess with rules of thumb while M&A advisors concentrate on complex business transactions that are more difficult to evaluate.
Many business brokers have a background, experience and education related to real estate where an M&A advisor has invested in an education related to business transfers, mergers, acquisitions and the underlying tax and legal issues that arise.
Business brokers bring buyers and sellers together, while M&A advisors go beyond the matching service and provide various financial arrangements, outsourcing options, transaction structuring and other services.
M&A advisors always thoroughly research the industry, properly package the business and prepare it for sale, proactively interacting with buyers throughout the whole process. Business brokers, on the other hand, spend far less time on each transaction, due to their financial constraints.
When implementing valuation methods business brokers utilize industry rules of thumb based on historical data. M&A advisors resort to valuation methods that include strategic potential, required investment, intellectual asset valuation and future potential.
Business brokers market their services on various industry websites and complete little buyer research and no direct buyer prospecting to select a candidate. M&A advisors market businesses to other businesses and develop a thorough and detailed package such as an “Executive Summary” containing a thorough analysis and write-up, and target interested buyers.
M&A advisors may work with each client for an extended period of time to ensure successful implementation of the project. They work with clients in the planning and strategy phases and carefully consider exit or liquidity alternatives in contrast to the passive approach utilized by business brokers.
Business brokers primarily rely on templates and standard forms. M&A professionals typically have the education, manpower and resources to provide a broader range of services and are better equipped to add considerable value to each deal.
