An experienced financial advisor can play a crucial role in structuring, negotiating, and closing a successful business sale.
Selling a business is a complex and emotional process that is difficult for entrepreneurs to navigate. Paul Inouye has spent more than thirty years in tech banking and recommends business owners seek out an experienced and capable investment banker if they plan to sell.
“Process matters, and you want to put your best foot forward in any sale transaction,” He says. “This holds a lot of pressure because you want to get the best offer for your hard work. The process can be a long and complex one, and if you haven’t undertaken a successful sale previously, it is easy to get over your skis very quickly. If you are planning to sell your company, a seasoned financial advisor can give you sound strategic advice and insights throughout the entire process.”
According to Paul Inouye who is the founder of the boutique tech bank Western Hills Partners, there are several key reasons to bring an investment banker into the loop. They can:
- Help position a company and develop compelling marketing materials and presentations
- Offer deep industry insight
- Provide knowledge of and access to potential strategic and financial buyers
- Bring strong negotiating leverage
- Develop extensive financial models
- Structure core deal terms
- Objectively assess strategic value
This advice still applies even if you have already found a potential buyer (or buyers). “An investment banker can help in whatever areas you aren’t experienced in handling,” he explains. “Some bankers might be great at networking to find a buyer but struggle with negotiations or understand core value. Or, you may not be as familiar with what a realistic price or what market m&a terms look like.”
Paul Inouye says entrepreneurs need to choose a banker they trust. “You are going to depend on this investment banker to take you through this complex process,” Inouye stated. “Choose a banker who has experience in your industry to help you get the highest possible price. A great banker will also help you avoid the common risks that come with selling a business. You need to have an expert who is knowledgeable with core business and financial due diligence requirements.”
He also says owners should look at the size of the deals the investment banker is handling before going with that professional or firm. “You want to pick a firm that frequently handles deals your size,” he says. “Choosing a firm used to large deals where your deal is the smallest might mean being pushed to the bottom of the priority list. If you choose a company used to smaller deals than the one you are working on, they might not be prepared to handle what you are after. A great firm will have the right team to handle your company, putting you inattentive and capable hands,” Paul Inouye explains.