Key Reasons to Use an Advisor When Selling Your Business

Advisors have extensive networks and industry knowledge that enable them to identify potential buyers and reach a broader market than a business owner could alone. They understand the nuances of the market and can position your business to attract serious, qualified buyers. This market insight can be particularly valuable in niche industries where finding the right buyer is crucial. In addition, all markets are dynamic – buyers change tactics based on their growth, profit goals, geographic footprint, target market and other changing needs, and therefore, the landscape requires constant contact, which is an advisor’s job. A good advisor has constant deal flow which allows them to be in touch with the latest buyer behavior characteristics.

Determining your business’s true value is a complex task that requires a deep understanding of financial metrics, industry standards, and market conditions – combined with PEO subject matter expertise. Advisors can conduct thorough valuations, considering tangible and intangible assets, to set a realistic and competitive selling price. This helps prevent the risk of underselling your business or setting a price that’s too high and deters potential buyers. Over the years, we have witnessed companies make costly valuation mistakes. The goal is always to get the best terms possible, and the art of valuation is part of making that happen.

Negotiating the sale of a business is a skill that requires experience, strategy, and emotional intelligence. Advisors bring these skills to the table, handling negotiations professionally to ensure you get the best possible terms. They can manage buyer expectations, navigate through offers and counteroffers, and handle any contentious issues that may arise during the process. A sale process is a marathon, not a sprint, and an Advisor helps set the most effective pace.

The due diligence phase of a business sale is critical and often the most stressful part for sellers. Advisors can assist in preparing all necessary documentation, identifying potential issues early, and developing strategies to mitigate risks. Their support ensures that the due diligence process is thorough and transparent, which helps build buyer confidence and facilitate a smoother transaction.

The legal and financial aspects of selling a business are intricate and require specialized knowledge. Advisors can collaborate with your legal and accounting teams to ensure that all aspects of the sale are handled correctly. This includes structuring the deal in a tax-efficient manner, ensuring compliance with regulatory requirements, and preparing for any potential legal hurdles.

Essential Considerations When Choosing an Advisor:

• Industry Expertise: Look for an advisor with specific knowledge of PEO/adjacent industries and business models. This ensures that they understand the unique challenges and opportunities you face.
• Track Record of Success: Verify their experience and success rate in similar transactions. A strong track record can give you confidence in their ability to handle your sale effectively.
• Fees and Structure: Understand the advisor’s fee structure and how they will be compensated. Ensure their incentives align with your goals to ensure a mutually beneficial relationship.

By carefully selecting the right advisor, you can maximize the value of your business and achieve a manageable process to complete the transaction – while still running your business! At McHenry, we have a saying:

“Please use an advisor, as this will easily pay for itself, and if you don’t utilize us, please utilize someone.”