You can do an acquisition on your own, but there are many advantages to having an experienced third-party advisor.
Should you hire an advisor for mergers and acquisitions? Many companies execute acquisitions on their own and are successful. In fact, there are entire corporate development divisions whose primary focus is to pursue mergers and acquisitions for the company. On the other hand, many companies do engage an M&A advisor to guide them through the process. There are many advantages to having an experienced third-party M&A advisor by your side.
- Augment internal resources – Most middle market companies and first-time buyers do not have a corporate development team. This means those whoever is in charge of acquisitions like the CEO, CFO, and other executives, are also busy doing their day jobs. Acquiring another company takes a significant amount of time and attention so it makes it difficult for your employees to split their time. A third-party advisor can augment your internal resources
- Provide expertise – When pursuing M&A the first time, a common challenge is that you don’t know what you don’t know. There are many steps and nuances in the M&A process from developing initial strategy to contacting the target to negotiations and due diligence. An advisor can guide you through the process, help you avoid common pitfalls, ask the right questions, and execute a successful deal.
- Protect the buyer-seller relationship – Especially in the world of not-for-sale, privately-held companies, the business is the owner’s baby. Selling is an emotional process and an experienced advisor understands how to approach the owner, assuage fears, answer questions, and act as a buffer during negotiations. In many cases you, as the buyer, want the seller to stay on for some time after the deal closes, so protecting your relationship is critical. Acquiring a company is not like buying a used car where you negotiate with the salesperson for the lowest price and never see them again after you close the deal. Instead, imagine driving off the lot with the salesperson in the car!
- Properly evaluate the opportunity – Companies often hire advisors for acquisition for some of the same reasons they hire accountants to do their taxes. A professional instills confidence and ensures everything will go smoothly. If an issue does come up later, you’ll know you did everything in your power to properly vet the opportunity. This may be especially important for those who answer to a board or shareholders.
Still not convinced? Don’t just take our word for it, here’s what one of our clients had to say:
“When you start thinking about M&A, in some cases, you might be able to do some of these things on your own, but in the end for the protection of yourself, and the company that you’ll be acquiring, it’s always best to get to get a third-party involved to help get through the situation to make sure all the pros and cons are looked at and the opportunity is properly evaluated. In the end, when the deal is done, you and the seller will be in alignment moving forward.” – Bonnie Ciuffo, President of South Carolina Financial Solutions