In a recent white paper titled “The Value of Middle Market Investment Bankers”, Michael McDonald, Assistant Professor of Finance at Fairfield University, surveyed 85 business owners who recently sold their business for between $10 and $250 million.
The survey asked these business owners to rank the following services in terms of importance from 1-5, with 5 being the most important.
As you can see from the graph above, “Managing the M&A Process and Strategy” was ranked as most important and “Identifying and Finding the Buyer” ranked as least important. I would venture to guess that if you had surveyed these business owners before the sale, when they were interviewing potential investment bankers, they probably had those flipped.
I can’t tell you how many times throughout my career I have heard the comment in some form or fashion from business owners that they are paying for my rolodex. In fact, that could not be further from the truth. As I detailed in a previous articles (click here to read the article), as of late, there has been a massive inflow of capital to the M&A space, and finding a buyer who is willing to pay up is not the difficult part–everything else is.
There is very little information available when it comes to private business sales. This lack of transparency and perspective leads to inefficiencies in a sale process. Small to medium sized business owners who don’t have meaningful M&A experience have no basis or data to properly evaluate value, structure, or terms. This becomes especially dangerous when dealing with an experienced buyer like those in private equity.
At White Rock Advisors, we take the advisor part of our name very seriously. We are not finders, searchers, or lookers, but truly a group of advisors. If you are thinking of selling your business or raising capital, give us a call and we can discuss how we can help you specifically.
What our clients say about us:
“White Rock Advisors is one of the best advisors we have ever met.”
“We could not have done this without the expert advice and assistance of the entire White Rock Advisors team…”
Incidentally, McDonald’s survey also found that 84% of respondents received a higher sales price than they initially estimated by using an investment banker!
If you have any questions on the above, or want to discuss your specific situation, please feel free to reach out to us at 972-644-7111 or email firstname.lastname@example.org.