05 Feb Selling Your Business, Part 2: The Home Stretch
You’ve embarked on an epic journey to sell your business, an endeavor which requires time and dedication, as well as financial resources. After spending the time to gather and review the necessary financial records, organize business filings, provide what is needed to develop marketing materials, and work with prospective acquirers, you feel quite accomplished as you should. But it’s not over yet.
No, even though you’ve come a long way already, there’s still a long way to go. Due diligence must be completed before you can close the deal. This process will have a material impact on the deal terms and the overall outcome of the transaction.
And so you find that two roads diverge before you: one is self-guided, your only reference a crudely drawn map given to you by a “business broker” who, you suspect, does not have a background in business, let alone cartography. The cracked blacktop is overgrown with brush and foliage, the path ahead isn’t clear, and with no way of knowing what to expect, you would very quickly be overwhelmed.
The other is a beautifully paved feat of engineering driven by a professional Mergers and Acquisitions advisor who offers expert direction at every turn. You’ve come a long way already, having prepared countless financial documents and marketing materials prior to shopping the deal with prospective acquirers and obtaining a signed Letter of Intent.
Now, all that remains is completing due diligence. Two roads, one choice, and any bumps or potholes could cause delays or cause the deal to fail. When everything is on the line, why leave anything to chance?
Victory Lies in Preparation
A lot can go wrong during due diligence. A mistake in the financials could discourage prospective acquirers or cause them to withdraw from the deal entirely. Failure to provide the requested information in a timely fashion may erode an acquirer’s confidence or lead them to infer risk where there isn’t any.
Even if due diligence concludes without incident, the prospective acquirer may still attempt to pay less than their initial offer. This is known as a re-trade and is common when buyers believe they hold all the leverage. An experienced intermediary will be prepared to counter, refusing to compromise the value of your business.
It is essential to hire the right intermediary to anticipate what will come and immediately take decisive action when necessary. A professional M&A advisor has the knowledge and the experience to guide you through each step of the due diligence process, avoiding delays while ensuring a smooth and successful transaction.
How an M&A Advisor Can Make the Due Diligence Process a Breeze
Success begins well in advance of a prospective acquirer executing a Letter of Intent and submitting a due diligence request list. A professional M&A advisor will prepare by conducting their own due diligence at the very beginning of the deal process, reviewing financials and all supporting documentation up front before any marketing materials are created.
This allows the advisor to identify and correct any errors or omissions, eliminating unpleasant surprises during the prospective acquirer’s due diligence. Information will be organized and stored in a secure virtual data room, so when the time comes, it’s as simple as granting access to the other counterparty.
The M&A advisor will ensure the due diligence process moves quickly and without interruption. They will field the prospective acquirer’s request list and ad-hoc requests and supply all pertinent documents for review in a timely manner. Expeditious turnaround inspires confidence in prospective acquirers and encourages their continued interest in the deal.
Prospective acquirers frequently submit additional requests for information, which an experienced advisor can interpret in order to ascertain what the acquirer is after. The more leverage you have as the seller, the better.
An M&A advisor is also equipped to protect you during the exchange of information by refusing unusual or unreasonable requests. For instance, if a task is too time consuming or would not yield any useful information, the advisor can offer an alternative solution to identify and address the prospective acquirer’s concerns.
Negotiations will continue throughout the due diligence process. An expert M&A advisor will deftly balance the exchange and review of pertinent information with your goals as the seller, positioning the Company to achieve the optimal outcome and secure the best deal possible.
These are just a few of the ways an M&A advisor can add value and help you successfully complete due diligence, but there are many more. The due diligence process is complex and requires a professional approach in order to get the best results.
Global Wired Advisors is here to help you sell your Digitally Native or FBA business. We are Mergers and Acquisitions specialists with over 50 years of combined experience in selling online companies. Try our Free Value Estimation Tool to see what your business is worth.
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