Don’t take on the M&A process alone

By Generational Equity


It goes without saying that the M&A process is a complex one, which is why it’s imperative that company owners considering the sale of their business are fully informed of the risks and consequences associated with trying to go it alone. Prior to taking your business to market, there are a number of issues which need to be addressed in order to prevent missteps during the sale. The most nominal of inaccuracies early on could result in implications that could later contribute to the breakdown of the process – costing all parties involved additional time and money.

It could be that you’ve become completely immersed in your business sector over the years and as a successful business owner, you believe that you’re well positioned to take on the sale of your company head on. While this may be true, even those who know their business inside out could be setting themselves up to fail without the assistance of an M&A advisor. In most cases your company will be your greatest financial asset, so unless you also happen to be an expert in deal structuring, you cannot afford to be inexperienced when it comes to its sale.

What could go wrong when selling your business?

Not knowing your business’s worth

The amount of business owners who attempt to enter the seller’s market with unrealistic expectations of their company’s value is surprisingly high. That’s why the importance of having a professional business evaluation completed on your company before you enter the market can’t be stressed enough. From this you will establish a benchmark value for your company, meaning your expectations will be in line with that of the market and you’ll be much more likely to complete a deal.

Interest from multiple buyers

While this may sound like an ideal situation for many, it has the potential to be your biggest pitfall. There is expertise required in distinguishing serious would-be purchasers from those who are just shopping around for the cheapest deal, which could prove quite a challenge for the average business owner. If your lack of knowledge in M&A is apparent you could also become an easy target for those looking to take advantage. For example, you may find yourself presented with complex and risky terms as part of an offer and may not detect the risk involved. While it’s understandable to get caught up in the excitement of the interest shown in your business, without the guidance of an M&A firm you will likely end up feeling overwhelmed when the offers come rolling in. 

Time-consuming paperwork

The process of due diligence involves a great deal of paperwork and fine print in relation to the operational assessment of your company. There’s also an exhaustive amount of paperwork regarding aspects of accounting, legal and tax. Tax discussions can be particularly in-depth and cover a range of details ranging from tax credits to jurisdictional issues and estate planning. All of this of course takes up a significant amount of time and undertaking this yourself will mean spending time away from running your business.

When selling your business it’s vital that you have access to the relevant expertise needed to progress your sale and ultimately close a deal that’s been structured in your favor. The above examples of what could go wrong are just a small selection of the things you will need to think about. It’s worth bearing in mind that going it alone isn’t impossible, but you will need to ensure that your knowledge of the M&A process is adequate and that you are able to free up what could be up to thousands of hours to take your business to market on your own.

The other option is to obtain the services of an M&A advisor. In doing so you will alleviate a lot of the stress associated with the sale process and they will save you a significant amount of time and money in the long run.

For more information on how Generational Group can help you to successfully exit your business, you can attend one of our complimentary M&A workshops. To start your journey to success, find your nearest M&A workshop today.