The Advisor’s Impact on the Sale: Maximizing Exit Value

An entrepreneur’s most significant financial payoff for all the late nights, weekends and tremendous amounts of hard work often comes in the form of an exit event. Even if the entrepreneur isn’t considering exit options throughout the life cycle of the business, the investors most certainly are.

However, what is the best way to maximize the outcome for you, your family, employees, investors and the customers that have supported you to this point of success? Most entrepreneurs and business owners will – at some point — look to a traditional M&A firm to assist in the sales process. While this is typically an essential step in planning for and executing the marketing of your business, substantial value can be created by hiring a transaction advisor well before hiring an M&A firm. Such an advisor would be singularly focused on representing the interests of the entrepreneurs and their investors and would be immersed in the business from the pre-planning stage all the way through the post-transaction activities that can continue well after the deal is closed. Here are three examples of how advisors can help entrepreneurs and business owners prepare and maximize their opportunity for exit success.

1. An Advisor is focused exclusively on serving your interest with no conflicts or competing interests: Unlike an M&A firm, a transaction advisor’s compensation is typically not determined by transaction value. While the incentive-based compensation paid to an M&A advisor is an important component in realizing the best possible value, it is also critical that the entrepreneur has access to sound, objective guidance on the overall deal terms – beyond just the sales price.    The process of selling a business can feel very isolating to an entrepreneur without a close advisor who is exclusively focused on his/her interest.
2.  If brought in early, an Advisor can help maximize value well before the planned exit event: When engaged well in advance of a transaction, an Advisor can potentially have a significant impact in the value of an organization. Advisors become immersed in the business, working with you to tune your company and enhance value prior to marketing your business. An Advisor will help identify all alternative means to achieve a liquidity event – including sale, IPO, management buyouts, recapitalizations, ESOP – prior to beginning an exit process. When it’s time to engage an M&A firm, an Advisor will help negotiate fee structure and often manages the overall relationship with the M&A Firm.
3.  An advisor is there to protect and serve: With an objective third party view of your business and the transaction, an advisor can help protect you even from yourself. Sometimes a seller is so eager that they miss the downside of the deal and having an advisor with deep experience can help save you from harm. Advisors can also see opportunities to increase the transaction and avoid missed strategies. Once the transaction is done, the advisor is still by your side to help manage post-closing issues such as escrows and wind-down of surviving entities

The Fahrenheit Group has a team of advisors that has served in the capacity, helping our clients successfully navigate some of the most important challenges facing their businesses including the exit process. If you want to discuss more about the impact of advisors on the exit process and value, please connect with us.

We help clients navigate the most important challenges impacting their businesses.

We are a national advisory group that helps clients navigate through the most important challenges and events impacting their businesses. Whether facing a transformative event or executing an aggressive growth strategy, clients turn to our team of seasoned, C-level executives and consultants for hands-on guidance in defining and executing strategies to deliver measurable results. We are stage and sector independent; serving clients in virtually every industry and ranging in size from emerging growth companies to Fortune 500, including private equity-backed portfolio companies.

From concept to capital raises to fully scaled operations, our team of advisors has extensive experience leading early stage companies.  We have built teams, launched products, established sales channels and navigated through the constant change, redirection and even the mistakes that face early stage businesses.