Most companies, whether they are buyers or sellers, lack the internal resources to undertake sophisticated mergers and acquisitions on their own. Having the right advisors on your side is of the utmost importance. While many believe that only an investment bank can fulfill this role, M&A advisory firms can also provide high-quality advice on corporate mergers, acquisitions, divestitures, and debt and equity financing.
Unlike most investment banks, a reputable M&A advisory firm will be more deeply involved in understanding the business and its long-term goals. This can lead to a more holistic merger or financing solution that addresses the long-term needs of the business. Additionally, during the actual merger or acquisition, an M&A advisory firm can provide a number of allied services.
How can an M&A advisory firm work for you?
A renowned mergers and acquisitions advisory firm:
- Provide industry knowledge and facilitate contact with the market, which facilitates the detection of opportunities and the formation of teams to execute a deal in your favor.
- Identify appropriate buyers and implement a sale to generate the best price for our client.
- Identify other businesses that offer a good strategic mix and help you with acquisitions/alliances that allow you to maintain and develop your competitive advantage.
- Address a wide range of issues, including refinancing, cash flow forecasting, and business plan development.
- Make sure the entire transaction process, from valuation to negotiation and completion, is completed successfully.
How to choose the right M&A advisory firm?
M&A advisory firms differ based on the monetary value of the M&As they handle. They are classified as bulk carriers (transactions greater than $50 million), mid-market companies (enterprise value between $5 million and $75 million), and commercial brokers (transactions less than $5 million). When choosing an M&A advisory firm, look for the following criteria:
- Reputation: The M&A firm must have a solid reputation in the financial world. When in doubt, ask for client references and double check.
- Experience in mergers and acquisitions: Always look for an expert in the field of mergers and acquisitions with collective experience in mergers and acquisitions, finance, banking and entrepreneurship. An expert with a deep understanding of the industry, while costly, may be worth it in the end.
- A proven workflow process: It is essential that the business follows a dedicated workflow process that ensures smooth and easy transactions.
- Customized solutions: Look for a company willing to customize its services to provide specific solutions that address your immediate and long-term needs.
- A broad base of lenders: A company with a large lender base is preferable as it can provide differentiated financing solutions for the M&A process.
All said and done, an M&A advisory firm should encourage transactions where the chemistry and compatibility between the parties is positive and sustainable. The M&A advisor’s job is to balance valuation considerations with long-term growth goals to ensure the right deal is made for all parties.