Selecting the Right Dealmaker
Many business owners eventually reach a point where they begin to consider looking for an acquirer for their business. Selecting an appropriate dealmaker or investment banker to assist you in accomplishing this can be a daunting task. Since most entrepreneurs only get a chance to sell their business once in a lifetime – employing someone who understands and appreciates the magnitude of this moment is of unparalleled importance. How
"...employing someone who understands and appreciates the magnitude of this moment is of unparalleled importance"can you be sure that you have selected the proper partner to assist you in this process? Here are a few characteristics to look for in a dealmaker.
1. CandidnessWhen you meet a dealmaker for the first time, be certain that you obtain a feel for his candidness and honesty. You will certainly be able to assess whether he is simply attempting to obtain a listing in order to take your company to the market or really listening to you and attempting to assess your needs. Does he ask the appropriate questions that give you, the owner, a chance to express your real feelings about the endeavor? Is he straightforward with his answers and does he make good eye contact with you? Is he confident in his approach and does he have a good relaxed body language? Most importantly, is he being candid with you? From experience, we can tell you that
Be suspicious if a firm wants to charge you for the initial meeting or if everything that is talked about is all “wine and roses”you probably won’t like hearing everything a candid dealmaker will tell you in your first meeting. Be overly suspicious if a firm wants to charge you for this meeting or if everything that is talked about is all “wine and roses”.
2. InsightA good dealmaker will delve into your personal needs in pursuing the transaction. Many business owners want to retire after transitioning the business over to a new owner, while others wish to take some of their hard-earned equity off of the table and continue to work for the buyer in the future. Being able to understand the nature and content of your needs and having the past experience to understand what type of transaction structures are available to accomplish your goals requires an insightful dealmaker. Make sure he informs you about whether a stock sale or an asset sale is best for your company and why. Ask him to inform you about possible reinvestment possibilities in the Newco (New Company) if that interests you. Ask him to give you his analysis on what to expect based upon your needs. Make sure that the dealmaker is insightful enough to access your needs, feelings and ambitions.
3. KnowledgeClosing deals is an art and requires a tremendous amount of knowledge and understanding of a myriad of factors. A dealmaker must have an excellent grasp of financial and operational business matters. He must understand projected tax consequences for the Seller and Buyer and know what type of sale, stock or asset to propose. Providing an accurate range of valuation with supporting methodology is extremely important. Look for not only a broad foundation of transaction experience in a dealmaker but, an excellent understanding of the psychology of deal making. These are all important issues when selecting a dealmaker who is right for you.
4. Coaching AbilityIn talking with a dealmaker, look for his willingness to act as your coach throughout the transaction. It’s no secret that the transaction process is foreign to most business owners. This is certainly not unusual since it usually only comes into play when an owner decides to sell or has participated in acquiring other businesses for his firm. Do you perceive that the dealmaker has the personality and skill to provide you with good information and direction? Have you had a direct, candid, insightful discussion that has given you a reasonable amount of trust in the person?
...you will lean heavily on your dealmaker for information and psychological assistance...From past experience, we can tell you that you will lean heavily on your dealmaker for information and psychological assistance. The bottom line is that the dealmaker will become your trusted associate throughout this process. Be certain that you choose someone that you can relate to over a three to six month period of intense activity.
5. Determination to Close, Willingness to Share the RiskWhile many investment banking firms in the industry will charge you upwards of $30,000 to $40,000 to attend a seminar, Aspen Mergers and Acquisitions puts our money where our mouths are. We adopted a practice early on in not charging any up-front fees in a transaction. We only get paid if we successfully close a transaction. We feel that this is a worthwhile risk to take because it makes us do our homework before accepting a listing to sell a business. It also motivates us to really understand your objectives before electing to take your company to the market. Because we make the extra effort to gain all of the pertinent facts up-front and get an agreement with you on an expected range of evaluation, we close over 95% of the deals that we take on. Our intimate knowledge of your business coupled with many years of creating valuable relationships with domestic and foreign buyers creates a unique ability to provide you with multiple offers involving various deal structures. We are risk takers and closers. Would you want it any differently?
Contact us for a free discussion and business valuation. We welcome having a valuable and candid conversation with you.
Robert A. Veri