A Good Investment Banker Will Make you Money - Not Cost You Money
Every once in a while, someone will say something to you that catches you so off guard that it is impossible to respond quickly. Only later do you say to yourself, “Oh, right, that’s how I should have replied to that one.” Well, that recently happened to me. A prospective client said to me that she didn’t think she could afford my services. It caught me without words, and I have to admit that it was only after a few days that I assembled an answer to her concern.
I was taken off guard because I have never felt that my fees had a significant impact on the proceeds of a business sale. For one thing, usually Uncle Sam is the biggest expense in any transaction, and my fee seems inconsequential compared to what the government gets. Also, in most cases, I know that the value I contribute is worth far more than my fee. In fact, one of the first questions I ask myself when representing a client is, “What can I do to maximize the value of this business?”
If your Exit Planning team has a different goal as their first priority, then you should find new professional advisors. If they are not asking questions or suggesting action steps that will help you maximize the value of your business, then they may be “good people,” or they may even have helped you in the earlier stages of your business, but they may not be the right persons to manage the sale of your business. (Visit ExitPlanPros for more information.)
How does an expert business broker add value to a sale? Here are some examples. For most of my assignments, I manage the sale from start to finish. In the early stages, I develop specific strategies and techniques to maximize the value of the business. I spend a lot of time “staging” a client’s business in order to increase its values. Staging, like in real estate, can produce great returns to the seller of the business.
But I offer much more to my clients. My company has nurtured 25 years of relationships with both corporate and financial buyers as well as a myriad of industry contacts. In many cases, I can identify a number of buyers for a client without having to do much more than getting out my laptop. The trick is not just identifying buyers but finding the right buyer—the one who will pay the highest price for the business. A better trick is to find a number of high-quality bidders, thus driving up the price to a point where there is only one bidder left.
Lastly, most deals have problems at some point or other, many of which can kill the deal. Every business owner has a story about how a sale transaction they were involved in went bust. I, and a large number of my satisfied clients, believe that most of the transactions I have been involved with would never have closed had I not been there to resolve a fatal problem or disagreement with a creative solution that no one else had thought of.
If you take the time to find the right professional M&A intermediary, he or she will add far more value to the business sale transaction than what you will end up paying them. I call that a good investment!
