Selling your Small to Medium Sized Business in Sydney
Who Should I choose to be my Corporate (or Business) Advisor?
Let’s say that you own an excellent SME business, you are an expert at running it, but you feel it is time to sell.
Maybe your motivation to sell is due to ill-health, waning enthusiasm, or a desire to retire and enjoy the wealth you have created. You are of course an expert at running your business but you realise that you are not an expert at selling businesses. Who should you turn to?
Poor choice of an adviser can lead to failure to sell at the right price or to sell at all. You may incur excessive fees and a highly disruptive process that could weaken your business.
To help you avoid those risks this paper summarises some of the matters you may want to consider.
Firstly, it is worth acknowledging that there are many organisations that can advise you on the sale of your business. These advisers are generically referred to as Mergers and Acquisitions (M&A) advisers but be aware that the market is segmented into a number of key groupings.
The table above is not definitive but illustrates that SME business owners probably fall into the natural market for Boutique Corporate Advisory firms. These firms are typically run by experienced individuals that have led M&A in accounting firms or investment banks or been M&A experts in acquisitive companies.
Using a Business Broker, Big 4 Accounting firm or Investment bank could be a major and costly blunder. A business broker may not have the necessary skills, resources or processes and an investment bank is likely to be focused on multi-nationals and not know the likely purchasers relevant to a SME business sale.
We believe that if your business is valued between roughly $3m and $50m you are likely to be best served by a Boutique Corporate Advisory firm. They should have the skills, resources and networks necessary to provide you with the best outcome. Most importantly they will understand your business and be equipped to find you the right buyer.
Once you have decided on the category of adviser to use the question of which specific adviser becomes foremost.
We suggest that you conduct a thorough research process. This could involve seeking recommendations from other business owners, but it could also involve a detailed search for and examination of Boutique Corporate Advisory firms that reflect your ethos and character.
Once you have a shortlist, talk to two or three advisors on a confidential basis, and get a feel for which you can best work with and which have the most appropriate skills and networks for your business.
Boutique Corporate Adviser Checklist
A checklist to run through would include:
- Do they understand business, have they actually run a business or are they just glorified car salesmen
- Do they understand your business and its’ key drivers?
- Are they telling you want to hear rather than what you need to hear? It is not unusual for advisors to give you an unrealistic expectation as to the value of your business if it may help them get a sale mandate.
- Will they actively seek out industry players so as to enable you to achieve a premium price for your business?
- Do they have appropriate networks into financial buyers? There are platforms like Neu.Capital that they can utilise to get more financial buyers involved if it makes sense for your business.
- Are they able to discuss with you what factors about your business will be critical to gaining the best price?
- Are they able to present these factors in a persuasive and professional manner or will they just cobble your web content and some financials together and call it an Information Memorandum?
- Are they experienced and know the traps, pitfalls and opportunities?
- Do they have sufficient resources to devote to you or are they too busy?
- Will the people you meet be the people actually doing the work, or will your work be delegated to less junior skilled staff.
For a discussion on selling your business, please call either Tony Holley on 0417 313 136 or Michael Mahoney on 0410 285 318 anytime. We at Hamilton Rich understand these conversations can be difficult to have during business hours so feel free to call us anytime that is convenient for you.
To help you achieve the goal to maximise the sale price for your business, we will be publishing a number of articles including:
- What Should I Pay To Sell My Australian SME Business
- 5 Mistakes Business Owners Make When Selling Their Business