[Editor's note: 2021 is proving to be a big year for mergers & acquisitions. Private Equity firms and strategics have lots of capital to put to work. This eLetter, first published a couple of years ago, received such positive response that we decided to update it and run it again. -dpm ]
It appears that we may be entering the next big surge in business transition activity fueled by the retirement needs of aging baby boomers. The first baby boomers turned 65 years of age in 2010 and we are now in the years with greatest numbers of boomers who need to sell to provide liquidity for retirement.
If you are a business owner contemplating a sale somewhere in your future, consider these common misconceptions about selling your business:
· I know the buyer - they are in my industry. Many business owners think they already know the prospective buyers – from their industry. However, in many cases where a sales process is conducted by an investment banker, an "outlier" (either a strategic or financial buyer) surfaces with an offer significantly higher than from those you may know. Many times these come from outside your industry.
Danger point: Some small M and A firms will offer free or low cost strategic or operational services and advice in order to get your sales transactional business, but these are either young, inexperienced associates or people who have not really run a business like yours. They may be very good at selling your business, but what they don't know can hurt you. If an investment banker is offering to help you with your business strategy, you should question why. Stick to investment bankers that stick to their core competency - selling a business.
· My lawyer (or CPA) (or Wealth Manager) will help me find a buyer. Finding a buyer is very different than finding the best buyer, the right buyer. Investment bankers do this every day. Most professionals understand what they do well....and what they don't. Find the right tool for the job!
The Mead Consulting Group helps business owners navigate through a successful sales process, including preparation (value creation), selection of the right team (investment bankers, transaction attorneys, tax counsel, etc.), and the sale process itself. We focus on maximizing value and leverage the business owner's and management's time so that they can focus on maintaining business performance. Contact us for more information.