Should I sell my business myself or contract an M&A Advisor?

After running a successful business for your entire career, selling your business when you feel is the right time is a natural next step. Potential things to consider may include: How do you sell your business? Should I sell my business myself or hire someone to sell it (i.e, M&A Advisor)? and What is my Business worth? just to name a few. This article is going to focus on the 2nd question, should I sell my business myself or contract with someone?

Selling the Business yourself:

I think we can all agree that no one knows the business better than the business owner. They’ve lived it day in and out and are involved to some degree in every aspect of the business that created the success the business has achieved. For a business owner, they may feel with some research they could spearhead the effort to sell their business. In some instances, this may work. A friend you may know that have expressed interest, have the funds and the inclination to purchase your business. Another Buyer may, out of the blue, contact the owner(s) expressing interest in buying the business. When I meet these individuals, I almost always ask did you feel you got a fair price and terms for your business?

I remember talking with a new Client who tried selling his business 7 distinct times by himself over several years. He had all the details needed for a prospective buyer to understand the business and address any concerns they may have. What greatly contributed to the sale not happening was the subsequent negotiation on the price and terms. The business owner had a very clear idea of what his business was worth but the buyers were in a better leverage position since they weren’t competing against anyone else. They could dictate their price and terms. This is probably one of the main reasons why, besides the owner taking on the dual responsibility of running and selling the business, in general, the probability of success for an owner to sell their business is low.

Contracting with an M&A Advisor:

This is where an M&A Advisor can assist with selling the business. Below are some of the best reasons to use an M&A Advisor when considering selling your business:

• As the owner(s), you can focus on running the business while the M&A Advisor (“Advisor”) prepares, markets, negotiates, and closes the sale of your business. As you can surmise this is not done in a vacuum. At each phase of the selling process, the owner(s) are involved in advising, assisting in creating additional information needed, and approving all aspects of the approach and major decisions.
• Advisors will initially spend a lot of time with the owners discussing the business, and how the process will work, requesting information to review and provide guidance in areas that need to be addressed before sale. See my article titled “My Business is Ready for Sale - Maybe”. The article provides some areas to consider reviewing and improving upon before sale. I’m a big believer in doing the work upfront with assessment and remediation to reap the benefits during the sales process.
• The Advisor spends a good portion of their time talking with Buyers to better understand what they are looking for in an acquisition. Furthermore, Buyers normally have criteria for what they’re looking for and the business information they’re looking to assess to consider a purchase. Having this information, allows the Advisor to initially identify who would be a good candidate for acquiring a particular business.
• Advisors normally run a marketing campaign process to attract a significant number of active Buyers to consider purchasing your business. If a Buyer is interested, the Advisor will act as the point person to answer any questions or concerns they may have. The purpose of all of this is to create an auction process that pits various Buyers against each other. This could drive up the price of the business and provide the Seller a strong leverage position over respective Buyers.
• Because of their business and business selling experience, Advisors are responsible for managing, with the owner(s) as needed involvement, any Indication of Interest, any Letters of Intent, Management Meeting Process, Due Diligence and stock, member, asset purchase agreement preparation, review and remediate, and closing process.

Hopefully, this information has provided some guidance as to some of the things to consider before selling your business. If you’re interested in discussing further, message me through LinkedIn or contact me at the information below.

Kevin Lilley

10 Column Advisors

Managing Partner

[email protected]