When do you need a corporate finance advisor?

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What matters when hiring one, and how should you go about it?

Many business owners are confused about whether they need a corporate finance advisor, and if they do, at what point should they hire one. There is also often scepticism about the value a corporate finance advisor might bring to a deal. Many an entreprenuer has thought that they can just do the deal themselves and save the expense.

It is more than likely you’re perfectly capable of getting that deal done in one fashion or another, especially if you have received an unsolicited approach. But its likely that significant value will be left on the table as you do. Almost without exception, this value leakage is many times the fee you would have paid for the benefit of professional advice. This misunderstanding of where a corporate finance advisor adds value is likely a function of the unfortunate overlap in perception between a corporate finance advisor and a broker.

A corporate finance advisor not only offers connections and access to buyers, but also expert support in deal negotiations and takes responsibility for the project, and by doing so enables you to stay focused on managing your business. Performance slippage during negotiation and due diligence is the number one reason deals fail. You must keep your eye on the ball despite the distractions that a deal delivers. When it comes to selling your business, it is not the time to learn how to become a corporate finance advisor yourself.

It’s not uncommon for clients to be alarmed at the fees for corporate finance services, but such fees pale into insignificance when considering what’s at stake. You only get one shot at getting this right, and a failed transaction can be difficult to come back from, often taking you out of the market for several years. One of the biggest struggles we have is articulating the level of work that goes into completing a transaction to a client when agreeing terms, but to this day, we have never had a negotiation on our fee when the deal is delivered. Quite the opposite, our fee note gets settled willingly.

If you’ve never spoken to a corporate finance advisor before because you’re thinking you’d only do so when you’re ready to entertain a transaction, you’re missing out. Quality corporate finance advice can add value to your business at any stage in your journey. Advisors work with you to ensure that any decisions made enhance value rather than erode it, and to make sure that you’re in the best position possible when a sale does come, whether that’s in one, three, five or ten years time.

It is a worthy endeavour to take the time to build a relationship with an advisor so that when the time comes to undertake the big decisions you are confident you have the right partner to help you see it through successfully. A sale of a business, especially an owner-managed business, is an emotional rollercoaster and having an advisor or advisors in whom you trust and can confide is essential.

If you’d like to speak to us about building such a relationship please get in touch, we’d be happy to help.