Hiring an M&A Adviser: What's the Value? Part 2

Posted By: Karen Fisman

You’ve spent years, decades even, building your business.  And along the way, you’ve figured things out, learned from your mistakes, and realized success.  Now you’re ready to consider an exit strategy; maybe you’re thinking about selling imminently, or in the next five years.  You have friends and colleagues who have gone through this. Some have hired M&A advisers, while others opted to do it themselves, as they’ve always done, avoiding the advisory success fee in the process. 

What should you do?  Does an M&A adviser create tangible value in a sale of business, or given the associated fees, and the knowledge you have of your industry, does it make more sense to do it yourself?

Last month, we considered whether business owners who hired M&A advisers to manage their sale process received a higher sale price than those that did it themselves. We reported on an independent study of sale prices received by more than 3000 private sellers, which concluded that private sellers retaining advisers receive an acquisition premium of 6-25 % over those that do not.  But why do adviser-assisted sellers get that acquisition premium?  And what is the net effect after advisory fees are factored in?  We try and answer those questions this week.

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