Being an advisor representing a client’s interests regarding the sale of their business requires many different skills. All of us who call ourselves “advisors” have varying strengths and weaknesses when it comes to these required skills. For example, many advisors have strong sales skills but weak valuation skills. Within any given transaction a successful advisor must have skills in accounting, finance, taxes, law, marketing, negotiating, human resources, contracts and many more.
Seek out an advisor who is willing to spend substantial time with you (the potential client) discussing your specific situation, including details of the business, how the process works, timing expectations, tax consequences, financing options, marketing methods and most important potential obstacles that may or may not be present and suggestions for managing them. This should be done without charge and without obligation.
Seek out an advisor who will share their CV / resume that shows their time and experience in the industry. How many years have they been making a living representing clients in this regard?
Seek out an advisor who can demonstrate his commitment to his education within the industry. There are many trade organizations such as the A.M.A.A., I.B.B.A., M & A Source that offer educational courses and designations.
Seek out an advisor who will prepare a detailed and thorough opinion of value. It should include an analysis of the company’s performance over 3-5 years. It should take into account many different factors; many questions should be asked; the methodology should be explained; suggestions should be made to address obstacles and increase value. Despite the tremendous value, many advisors will provide this service for no charge to facilitate a long-term relationship with a prospective seller.
Seek out an advisor who will represent you on a contingency basis with or without a small retainer. A contingency basis is a high-risk scenario for the advisor so expect to enter into an exclusive contract for a period of 9-12 months.
Seek out an advisor who will explain how they will maintain confidentiality throughout the process. He should advise YOU to tell no one regarding the sale of company! Who sees what when!
Seek out an advisor who will explain the marketing plan for the process. It should include a comprehensive “Executive Summary” that will be the primary marketing piece provided to prospective / qualified buyers. All advertising should be considered “blind” and do not identify the business.
Seek out an advisor who understands all the financing options regardless of the enterprise value and explain the likelihood of certain financing scenarios including SBA lending, conventional lending, private equity and other capital strategies. It is typical for every type of buyer to require the seller to have some skin in the game.
Seek out an advisor who does not pressure a prospective seller to make an immediate decision to sign a representation agreement. The decision to sell a business should be a process. Promises of quick deals or waiting buyers are sales techniques that have no place in these matters.
