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Finding the right corporate advisor

By: Megan Young, Sasfin Bank Corporate Finance

Nowadays, getting the right advice when looking to sell your business, list your business or raise capital for your business can be a risk on its own.

The market has many advisors who do not partner long-term with their clients and who avoid taking on deal risk, which can leave a business owner wanting when identifying a long-term trusted advisor.

However, a mid-market focused bank is well placed to bridge this gap. They are able to structure a solution for your business that ensures an optimal, profitable outcome for you and your business. This is achieved through the advisor’s will to take on deal risk on the basis of joint reward.              

 

 A fast changing landscape

In a market where trends change rapidly due to unpredictable conditions, business owners are now, more than ever, in need of a long-term trusted advisor.

When evaluating strategic options as a business owner, information can be hard to come by. A trusted advisor knows where the low-hanging fruit can be found and what future expected growth trends are. They will ensure that you position your business to catch the best wave - whether that means optimising your exit from your business or raising capital. 

Failure and removing the unknown

Through removing the unknown, business owners can lower their risk and reap the rewards.

Transaction success begins when you are aware of reasons for deal failure and you partner with a bank specialising in servicing mid-market companies.

Ideally, the partner would proactively assist with deal structuring and execution with the following in mind:

  • One size does not fit all; and
  • Every business has unique needs.

An advisor with a clear focus on mid-market corporates where risk is shared will help you achieve your objectives. In addition, a qualified and experienced business advisor acting on your behalf would help prevent deal failure.

Taking into account that most deals do not succeed due to failed processes, you need to consider the following when pursuing a transaction:

  • Certainty of execution
  • Timing
  • The optimal process
  • Pricing
  • Earn-outs/ warranties offered

During negotiations ask yourself:

  • Who is the best bidder?
  • Do they have the money?
  • What are my options if my business doesn’t sell?
  • How does payment work? 

Through being proactive you can remove the unknown. This lowers the risk of deal failure and facilitates a quick execution of the deal process.

It is critical to choose an advisor with a solid understanding of the market landscape, valuations and processes. The specialised ability to successfully execute a transaction contributes substantially to deal success.