Importance of advisory services in mergers and acquisitions

Most companies, whether they are buyers or sellers, lack the internal resources to carry out sophisticated mergers and acquisitions on their own. Having the right advisors on your side is of the utmost importance. While many believe that only an investment bank can fulfill this role, M&A advisory firms can also provide high-quality advice on corporate mergers, acquisitions, divestitures, and debt and equity financing.

Unlike most investment banks, a reputable M&A advisory firm will become more deeply involved in understanding the business and its long-term goals. This can lead to a more comprehensive financing or merger solution that addresses the long-term needs of the business. In addition, during the actual merger or acquisition, an M&A advisory firm may provide a number of allied services.

How can an M&A advisory firm benefit you?

A renowned M&A advisory firm:

  • Provide industry knowledge and ease of market contact, making it easy to spot opportunities and build teams to execute a deal in your favor.
  • Identify suitable buyers and we will implement a sale to generate the best price for our client.
  • Identify other businesses that offer a good strategic fit and assist you with acquisitions / alliances that allow you to maintain and build your competitive advantage.
  • Tackle a wide range of issues, including refinancing, cash flow forecasting, and business plan development.
  • Make sure that the entire transaction process, from valuation to negotiation and finalization, is completed successfully.

How to choose the right M&A advisory firm?

M&A advisory firms differ based on the monetary value of the M&A they handle. They are classified as bulky support firms (transactions greater than $ 50 million), middle market firms (business value between $ 5 million and $ 75 million), and trade brokers (transactions of less than $ 5 million). When choosing the criteria of an M&A advisory firm, look for the following:

  • Reputation: The M&A firm should have a solid reputation in the financial world. When in doubt, ask for customer references and see for yourself.
  • Mergers and acquisitions experience: Always look for an expert in the field of mergers and acquisitions with collective experience in mergers and acquisitions, finance, banking and entrepreneurship. An expert with in-depth knowledge of the industry, while expensive, may pay off in the end.
  • A proven workflow process: It is essential that the company follow a dedicated workflow process that will ensure smooth and easy transactions.
  • Custom solutions: Look for a firm willing to customize its services to provide specific solutions that address your immediate and long-term needs.
  • A large base of lenders: A company with a large lender base is preferable as it can provide differentiated financing solutions for the M&A process.

Said and done, an M&A advisory firm should encourage transactions in which chemistry and compatibility between the parties is positive and sustainable. The M&A advisor’s job is to balance valuation considerations with long-term growth goals to ensure the right deal is made for all parties.

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