Choosing a Corporate Finance Advisor

Key factors to consider when choosing a corporate finance advisor to sell your business

Selling your business can be a highly complex, time consuming, and emotionally demanding process.  Choosing the right corporate finance advisor to guide you through the sale process will be one of the most important decisions you make - and you only get one chance to get it right.

What is the role of the corporate finance advisor in a sale process?

An experienced advisor should work to understand your sale objectives and formulate a sales strategy aimed at meeting these as much as possible. The advisor will actively manage the whole sales process from start to finish, in a well-planned, strategic and timely manner providing you with:

• Insight into, and access to, potential buyers that are the right fit for your business,

• An evidence-based assessment on the value of your business,

• The best preparation and positioning of the company for sale,

• The best overall deal structure,

• Superior sale tactics and negotiation strategy (not just on purchase price but all financial and commercial terms of the transaction to achieve your objectives),

• Coordination of your other advisors such as legal and tax,

• An efficient process that minimises the disruption to the business,

• Support for you and your team in key decisions and conversations.

To ensure you find a corporate finance advisor that can fulfil this role, there are certain things you should look for:

1. Trust

Appoint a team who you can trust, who you have good initial chemistry with, and who you believe will actively manage and work well with all the other parties involved in the transaction, like the buyers, solicitors and other advisors.

Confidentiality is critical and if breached can jeopardise a sales process. You will need to trust the advisor will be able to maintain confidentiality and commercial sensitivity across all aspects of the deal, including qualifying buyers, performing buyer tours of your facility, or compiling financial information, without exposing any party to an undue level of risk.

Other early trust indicators are being comfortable that the advisor understands your business and sector quickly and competently and that they can communicate clearly.

2. Industry Credentials

Make sure the advisor has a sound track record of advising businesses in your industry and can provide references if required. These will be important in demonstrating access to quality buyer contacts, insight, and strategic relationships, which will increase the number of potential buyers for your business. This in turn provides a better chance of finding a good strategic fit, an attractive price and terms.

The best buyer may not be Irish in which case access to international buyers will be an important consideration. Ideally the advisor will have a list of pre-screened buyers in your industry who are actively looking for a business.  

3. Experience

Every deal is different and has its own idiosyncrasies. You are engaging the experience of the deal team: the more deals they have collectively worked on, the greater the ability to anticipate and successfully navigate the unexpected issues and complications that come with every deal.

Deal experience is also invaluable in taking the lead in tough negotiations hence protecting the ‘warm relationship’ between buyer and seller, who often need to work together post-transaction in some capacity.

When it comes to due diligence, a corporate finance specialist will help navigate requests from various advisers to distill what constitutes key information.

Having the right team can make all the difference - particularly in the middle of a sales process - so you can remain focused on running your business effectively and profitably during the sale.

It is not just the senior deal lead you are hiring but the whole team. Get to know them and understand who will be there to support you through the journey and what level of senior dealmaker hands-on involvement there will be.

Questions to ask an advisor:

1. What is your experience in deals in my sector?

2. What are your views on likely buyers and do you know the buyers?

3. Do you have international reach?

4. Who will the team be?

5. What structure is most suitable for me to achieve my objectives?

6. How will you increase the value of my business?

References - Request references for any advisors you are considering. Speaking with past clients will help you know how their transactions went and whether they were genuinely pleased with the results.

Pitch - Don’t be afraid to speak to a couple of advisors to find one you are most comfortable with. Carry out a ‘beauty parade’ of two or three advisers and ask them to pitch.

Fees - Any fee should primarily be based on success to align the advisor’s interests with yours.

An important caveat on valuation:  At Key Capital, we say to clients not to choose an advisor based on their valuation advice alone. It can be tempting to choose an advisor who is telling you a high valuation but an advisor needs to demonstrate that they understand the value and how buyers will assess the business to ensure the valuation is realistic and achievable. 

Advice from Irish entrepreneurs on selling a business

Read more from three entrepreneurs who share their reflections on things they wished they had known before going through a sale process: Karen Malone (FCCA), Global CEO and Co-Founder of Centaur Fund Services, James McGann, Co-Founder at Frankie Health, Denise Browne, Co-Founder at Label Craft.

Also Read: Preparing a Business for Sale

Contact Us:

For further information about how Key Capital Corporate Finance can help you sell your business, please email or call us in confidence.

Email:   richard.tunney@keycapital.ie 

Phone: +353 1 638 3838