Selling your business is no DIY project

How M&A advisors can build the best deal for your business

Do-it-yourself mergers and acquisitions (DIY M&A) has become a symptom of many failed privately held company sale transactions. In these situations, company owners and managers have attempted to manage their own sale process without assistance from a lead sell-side financial advisor and with limited assistance from their other deal professionals. 

In a typical situation, the business owner is approached by a potential buyer and believes that he or she can navigate and negotiate a sale process with accounting, tax and legal advice.  Unfortunately, a large number of these one-to-one negotiations, which business owners mistakenly believe will save time and money, are ending without a closing, resulting in a very frustrated and discouraged seller.

Reasons for DIY M&A failures

• Lack of negotiating leverage with a single buyer who is aware that there are no other competing offers
• Perceived or real re-trade of transaction value and terms
• Due diligence delays, issues and findings due to insufficient upfront preparation and limited bandwidth to facilitate information flow  
• Deal process fatigue as the seller attempts to balance managing a sale process while operating their business

Remedies for success

• Retain a lead sell-side advisory team including investment banking, legal, accounting and tax professionals
• Work with your advisors to determine the potential range of enterprise value (the headline sale price), pre-tax and post-tax equity proceeds (the net amount of money for the seller) and the desired key transaction terms  
• Assess the benefits and costs of running a sell-side process that includes a number of strategic and financial buyers
• Run a sale process with multiple bidders with a focus on:
• Maximizing value
• Optimizing transaction terms and deal structure
• Minimizing closing risk 

In many instances, a seller can benefit from working with an investment banker who can lead a well-controlled and time-efficient sale process, which could include: