–SINCE 1982–

How Soon Should a Business Owner Engage with an M&A Advisor?

With market uncertainty increasing, when to engage with a Merger & Acquisition(M&A) Advisor is becoming even more important. Our firm often comes across business owners who could have made key strategic changes years ago that would have made the ownership transition much smoother and more profitable at the closing table. Because market and industry conditions fluctuate, many times the advice these owners received set unrealistic expectations that could have been avoided if they had met with M&A Advisor earlier. In our monthly update, we outline reasons why business owners should engage with an M&A Advisor earlier in the process.

Preliminary Assessment of Objectives

Engaging an M&A Advisor early allows the business owner to discuss their goals, evaluate the feasibility of different types of transactions, and identify potential challenges or roadblocks that may arise. While even a start-up business should consider how they will eventually exit, business owners should start seriously considering options at least 5-10 years out from the sale. The key here is keeping options open as much as possible. While planning is important, often events occurring both inside and outside of the business will determine what options are realistic going forward.

Long-Term Strategic Planning

Strategic M&A activities should ideally be aligned with the long-term vision of the business. By involving an M&A Advisor early in the planning, a business owner can integrate the transaction into the company’s broader strategic plan. This ensures that the M&A activity is not a reactive decision but a well-thought-out step that supports the business’s growth and evolution. The unique perspective of an M&A advisor will help provide more clarity as it relates to valuation, potential acquirers, market/industry trends, and methods to manage assets. It’s important that the M&A Advisor works strategically alongside the accountant, financial planner, and other key advisors to help ensure the business owner’s goals are realized.

Building Relationships and Networks

M&A Advisors bring more to the table than just transactional expertise. They have extensive networks within the industry, which can be a valuable resource for identifying potential partners, buyers, or sellers. Engaging an M&A Advisor early allows the business owner to leverage these networks effectively, increasing the chances of finding the right match for the transaction. All too often, a business owner may have a good accounting firm but lacks an experienced strategic financial planner or they have a great business advisor but the business needs more advanced accounting to address working capital demands in order to grow. As with our firm, we often refer reputable other professional firms who fully understand the business transaction process and can provide the level of expertise required.

Market Analysis and Timing

The timing of an M&A transaction can significantly impact its success. An M&A Advisor can help the business owner assess the market conditions, identify trends, and determine the most opportune time for taking the business to market. Waiting too long or rushing into a transaction without proper market analysis can have negative consequences.

Engaging an M&A Advisor early in the process provides adequate time for strategic planning, relationship building, and market analysis. Business owners should seriously consider seeking M&A advisory services if they are within 5-10 years from the ownership transition to ensure they have the expert guidance needed to navigate the complexities of the process and achieve their desired outcomes. The majority of our business comes from referrals, and we appreciate your continued trust in our firm.

Robert W. Amerine
President, CBI, M&AMI