Here's the sad, sad movie that I get to see all the time: a business owner, that I have talked to, calls me to tell me that he or she sold their business and not only didn't hire me, but didn't hire an M&A advisor at all.
So why is this frustrating? Well, obviously I like to get hired to be the company's advisor during a sale, but that's not the worst part. I mean, we win some pitches and we lose some pitches, rejection is part of this business.
No, the worst part is when the company owner says, "The buyer and I, we worked it out over dinner. We wrote the transaction out on a literal napkin. Having an M&A advisor would have only complicated things and I didn't want to lose the deal." There is no way to convey in text the eye roll that happens after I hear this.
You know who hates having M&A advisors or investment bankers as part of a deal? The buyers.
You know why they hate having M&A advisors as part of the deal? Because we call their bluff. We shift the balance of power to you, the seller. We remind them that we know the current market for terms and conditions and what they just suggested is ludicrous. All those things and more.
And I know that, as a seller, having someone "fighting" for your side may seem like it will just make this great napkin-based-buyer go away (and maybe you've already spent the money in your head and you really want that vacation home in Arizona....), but I can assure you that if they are really interested in buying the business, they will not leave. I'm serious. If they really want the business, they won't leave.
In fact, a good buyer will respect a seller that brings an M&A advisor to the table. A good buyer knows that
- this means the seller is serious and not just "testing the waters"
- this means that the due diligence will go more smoothly and be organized
- the likelihood that the transaction closes goes up exponentially
They probably also know that they won't be able to get everything they want and that they won't get the company for a steal. But really now, do you want a buyer like that? No. The answer is no, you do not.