The Advisor’s Role, Part 2
Last time, we looked at the steps a business advisor and client take to start the process of finding an acquisition candidate or possible buyer. Initial steps include developing a list of potential candidates, reaching out to them via letter and follow-up phone call, then arranging confidential face-to-face meetings, and, if both parties want to proceed, setting up a site visit.
If the site visit is successful and both sides want to continue the process, the advisor helps make arrangements for sharing confidential information such as financial statements, customer lists, equipment lists, contracts, etc. He then works with the client to review all the documents, develop an offer to buy (Term Sheet), or evaluate an offer that has been made to buy the client’s company.
At this stage, the client and the candidate will generally become more directly involved with each other, but the Advisor will still be on hand to review any issues or proposals, and to advise the client.
Often, the advisor will act behind the scenes in these later process stages, although he may step forward to act as a buffer if negotiations become too emotional, helping keep both the client’s and the buyer or seller candidate’s emotions in check. Since the advisor is in a better position to ask the tough and uncomfortable questions that the principals may avoid asking, he can generally help set realistic expectations without the talks feeling like a negotiation, and bring the process to a successful completion for both sides.
In Summary, if you are interested in exploring a business sale or acquisition, be sure to choose an advisor with industry expertise, a background in Merger and Acquisition transactions, and who will be with you at every step through the entire process.