Unlocking the Value: Why Hiring an Investment Banker Pays Off

If you’re an entrepreneur, you’re accustomed to taking the lead and handling things on your own. However, when it comes to selling your business, working with a seasoned expert is crucial. 

A recent Forbes article on this topic cited a study by the University of Alabama and Portland State University that further proved just how much value an investment banker can provide. According to Forbes, this study involved “4,468 transactions over a 20-year period estimated that sellers who hired an investment banker received valuation premiums around 25 percent, depending on their methodology.” This study also found that “~99 percent of 1,727 business sales by sophisticated institutional sellers involved an investment banker.” 

If you’re not a residential real estate agent, you probably know that working with one is the best move to maximize value when selling your house. Similarly, even though you know your business the best, you don’t know the ins and outs of the M&A process and how to achieve value the way an investment banker would be able to. Not only can an experienced investment banker help you maximize your business’s value, but they can provide a number of other advantages in the process: 

  1. Expertise in Valuing and Positioning Your Company for Sale
    Experienced investment bankers can bring their expertise to the table when evaluating a business’s worth and can effectively strategize to present it in the most compelling manner to attract potential buyers.
  2. Creating an Auction Environment
    A single buyer vying for your business is negotiating from a position of power. We prefer to leverage multiple buyers competing for your business and then structure a deal that maximizes your return. Navigating this process requires the skill and experience of a seasoned investment banker. Your company is worth what the highest bidder is willing to pay for it. 
  3. Saving Time
    Selling a business can often take 500+ hours of work over a period of six to ten months. It is very difficult for a business owner to both run their business and actively manage a time-consuming business sale process.
  4. Access to a Wide Range of Potential Buyers
    Investment bankers have a wide network of contacts in the investment community, including private equity firms, strategic buyers, family offices, search funds, and other potential acquirers. We maintain a database of these vetted contacts known to be looking for businesses and also do targeted marketing to generate additional interest.
  5. Experience in Negotiations and Deal Structuring
    From preliminary conversations to deal closure, investment bankers will guide and support you every step of the way. They also serve as a valuable intermediary, capable of taking a more assertive role when needed, allowing you to maintain a positive rapport with potential buyers.
  6. M&A Process Knowledge 
    Investment bankers have a deep understanding of the M&A process from the beginning phases through closing, and can expertly navigate any questions or issues that may come up along the way.
  7. Confidentiality
    Hiring an expert to sell your business will ensure that you maintain confidentiality throughout the process, which can be important for business owners who want to avoid tipping off competitors or alerting employees to the sale.

Hiring the right investment banker can ensure that other deal terms align with the seller’s exit strategy and personal goals. They create compelling narratives to engage potential buyers emotionally.

Additionally, they can help prevent seller’s remorse by identifying the most suitable buyers possible. Your banker will help you structure complex deals and offer legal and tax advice relevant to your situation. In addition, the banker acts as a buffer and can play “bad cop” while allowing you to maintain a good relationship with any potential buyer. Just as you wouldn’t swim in shark-filled waters without friends nearby to help, neither should you attempt to sell your company on your own.

Don’t Go It Alone 

Numerous entrepreneurs consider trying to sell their business on their own, often in an attempt to avoid the costs linked to hiring an investment banker (M&A advisor). Nevertheless, the ROI greatly justifies the investment, safeguarding your well-earned capital from being overlooked.

We don’t advise selling a business without professional guidance, as doing so could lead to financial losses and increased risks.

Partnering with an investment banker is recommended for those who lack the expertise, a broad buyer network, and the time to manage the complex sale process.

ACT Capital Advisors – We Sell Your Business to Empower Your Dreams 

Founded in 1986, ACT Capital Advisors is a premier M&A advisory firm serving the lower to middle market. We specialize in sell-side and buy-side M&A, exit planning, and debt placement. Our Auction Process results in the best transaction price and terms when selling a business.

Monetizing your life’s work is an important event. To maximize your ROI, work with ACT Capital Advisors. We have M&A experts in over fifteen locations across the United States and Canada, and nine key industry groups of experts in their sectors. To learn more, please visit today.

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