4 Hallmarks of a Great M&A Advisor
Navidar | August 6, 2018
The right M&A advisor might be the most valuable player on your deal team. These experts support CEOs to continue running the business by offering helpful strategic advice, valuation insight, authoring investment teasers, and negotiating a more valuable deal. Not every advisor is created equal though. When searching for an investment bank or M&A advisory firm to partner with, look for these four key traits of great M&A consultants.
Ultimately, you’re hiring an M&A advisor to get access to the experience you lack. You want an advisor who has closed a lot of deals, of course, but that alone may not be enough. Every industry is different. Hire someone with plenty of experience in your sector. They’ll be better equipped to anticipate potential challenges, offer valuation tips, and locate the perfect buyer. Ask about similar deals the prospective advisor has closed in the past few years, and seek out someone with lots of experience with similarly sized businesses in the same industry as yours.
When you hire an M&A advisor, you’re hiring an entire team. Ask about the associates, analysts, and junior associates standing behind the deal. Know that the value of an M&A advisory team hinges on its experience. So get clear details about how much experience the supporting players have, and how many partner hours you can expect if you hire the firm.
At minimum, you should expect to meet with everyone who will work directly on the deal. Pay attention not only to their experience, but also their personality. After all, you’ll be spending a lot of time with these people. It needs to be a good fit.
Reputation is everything in this business. An advisor who has burned bridges is one who may struggle to negotiate a fair deal, recruit buyers, and play nicely. Make sure you choose only firms with references and an outstanding reputation. They should also be accredited by an accrediting agency. Don’t just ask for accreditation details and references. Verify them. Ask lots of questions, and know that a qualified investment banking firm will gladly be able to provide you with several references.
About half of deals fail. This weighs heavily on how deals are structured. Not all failed deals are the fault of the advisory team, and few advisors want to work for free. The fairest deal structure is usually an upfront retainer and then a success fee in the form of a portion of the total sale value. This ensures that the team is paid, but also incentivizes them to work hard on your behalf. Don’t shy away from asking pointed questions about fees, or from negotiating a fee structure that feels fair to you.
Your team needs to be invested in the deal’s success, and the best way to ensure this is with a reasonable percentage of the deal going to the advisory team.
Navidar is an investment banking firm, providing companies and investors in dynamic industries with strategic M&A advice, capital raising solutions, vital insights and breakthrough opportunities. Clients can expect to receive completely independent advice and creative solutions – experiencing the difference between uncertainty and success.
We provide completely independent advice, vital insights and breakthrough solutions for your most challenging M&A transactions, capital needs, negotiations, boardroom issues, or business opportunities. Please contact us to exchange thoughts about how we might be able to best assist you in accomplishing your goals.