Monday, September 02, 2013

Contemplating an External Sale? Do Not Proceed Without an M&A Professional!

A seasoned M&A professional with experience selling similar businesses can help with positioning your business for sale, finding potential buyers, managing the entire sale process and representing you in negotiations with potential buyers.
I recently sat down with Don Hilton, Founder and Managing Partner, of Distinct Capital Partners Inc. ( in Toronto, Ontario.  Distinct Capital provides investment banking, corporate finance and advisory services to shareholders of owner operated businesses with revenues between $5M to $100M.  Don has over 30 years of experience in investment banking with several Canadian investment dealers and has worked closely with business owners to assist them through the sale process.

I wanted to understand what a business owner should expect when working with an M&A professional throughout the sale process.  According to Don, 4 key issues in this regard include:
  1. Begin With Goals and Options – to properly represent, assist and advise you, the M&A professional must understand your goals (e.g. maximize price, leave legacy, etc.) and explore the exit options (e.g. strategic buyers, financial buyers, entrepreneurs, management, etc.) with you.  In addition, do you want an immediate exit or will you consider staying on under an employment contract to assist in the transition;
  3. A Time Consuming Process – the sale process is a time consuming process that can take 6 to 9 months from beginning to end and you need to stay focused on your business during this time.  The M&A professional can take on many tasks (e.g. prepare the teaser document, offer memorandum, buyer search, etc.) and ensure your involvement only when required (e.g. management presentations, Q&A, negotiating table, etc.);
  5. The Man in the Middle – many business owners have never been through the sale process.  The M&A professional has experience and is your representative at the negotiating table to deal with other professional advisors involved in due diligence and issues such as deal price and structure.  The M&A professional is skillful at negotiation, not emotionally involved in the business and will not take things personally, thereby increasing the odds of getting a deal done; and
  7. Getting the Deal Done – the M&A professional’s sole function is to sell the business.  As a result, there is a much better chance that a deal will be closed in less time.  The M&A professional is motivated to complete a transaction as he/she is generally paid when you get paid and a good broker can and should be able to sell your business for a higher price than you could on your own.
Don generally gets involved in the exit planning process once the business owner has decided to embark on the sale process.  He routinely works closely with other professional advisors including the business owner’s accountant, lawyer, tax specialist and business valuator.
Not relying on an M&A professional to assist in the sale of your business can have serious consequences.  A few years ago, one of Don’s prospects decided he was better suited to sell his own business (after learning that Don’s assessment of business value was lower than his).  Although the business owner did find a prospective buyer, he was ultimately not as skilled as he thought.  The deal fell apart after one year of intense due diligence and time consuming negotiations.  Much time, effort and money was wasted.  The value of the business also suffered because the owner was not entirely focused on managing the business over this period of time. 
Don’t let this happen to you.  When it comes to selling your business, finding the right buyer can be daunting and very time consuming if you try to do it yourself.  A seasoned M&A professional understands the market, has a network of potential buyers and can weed out the "tire kickers" from the serious buyers with sufficient financial resources.  When you interview prospective advisors, here are some questions to ask before making your selection:
  • History - how long have you been selling businesses?
  • Experience - how many businesses have you sold and in which industries?
  • Testimonials - do you have any testimonials?
  • Process - how do you find, locate and qualify buyers?
  • Success rate - what is your closing ratio?
For more information about working with an M&A professional to help market and sell your business, contact Don at  If you have any questions regarding the exit planning process in general or want to learn more about our VSP Exit Starter Program, contact us at

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