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Beyond Business Broker Listings: The Holistic Role of M&A Advisors in Mid-Sized Transactions

June 23, 2024

Planning on selling your business but you’re not sure whether to engage a business broker or Mergers and Acquisitions (M&A) Advisor to help you do it?

The first step is to learn the core difference between Business Brokers and M&A Advisors (you can do that here). Next, it’s crucial to understand that business broker services are limited in scope and therefore they may not be the best partner to help sell your business, particularly if your business’ annual revenue is more than $5 million.

To understand why this is, we need to dive into the multifaceted role of M&A Advisors and how their services transcend mere Business Broker listings…

M&A Advisors Provide Strategic Planning and Ensure Goal Alignment

Mergers and Acquisitions (M&A) advisors work closely with business owners to understand their strategic vision. This involves delving into long-term goals, market positioning, and the desired outcomes of the transaction.

“It’s important to have that right partner for the business and for the transaction; someone who’s going to be fair and reasonable, and work to a timeline.”

Steve Wampold, former CEO of Big Mouth Inc. (sold via Woodbridge International in 2016)

Aligning the goals of buyers and sellers is another critical aspect. M&A Advisors facilitate this alignment, ensuring that both parties are on the same page regarding the future direction of the business.

M&A Advisors Are Experts at Comprehensive Financial Analysis

Unlike the basic business valuations provided by Business Brokers, a M&A firm will conduct in-depth financial analyses. This involves assessing the financial health of the business, identifying key value drivers, and determining realistic value ranges.

M&A Advisors assist in creating detailed financial projections that provide potential buyers with a clear understanding of the business’s future potential. This includes calculating your company’s EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), the financial metric that measures a company’s profitability and cash flow by looking at earnings before deducting certain expenses. EBITDA is typically the first financial indicator buyers look at because it tells investors how efficiently a company operates and how much of its earnings are attributed to operations.

M&A Advisors Enhance Operational Efficiency

M&A Advisors will gain an understanding of the company’s operations. Based on their findings they can offer strategic recommendations to enhance operational efficiency, making the business more attractive to potential buyers.

M&A Advisors Handle Stakeholder Management and Communication

Mid-sized businesses involve a diverse range of stakeholders, including employees, customers, suppliers, and investors. M&A Advisors adeptly manage communications with these stakeholders, ensuring transparency and minimizing disruptions.

“Whereas in the past we were working on our own, Woodbridge had this whole team that was just phenomenal in making us feel like they had our back the whole time, that they were guiding us. They were moving things along, keeping us organized, and that took a lot of the bulk of the day-to-day stress out of the process.”

Tim Shea, former CEO of FRG Waste (sold via Woodbridge International in 2022)

M&A Advisors are experienced at handling these talks and considering the interests of all stakeholders. Their ability to balance conflicting interests ultimately contributes to smoother transactions.

M&A Firms Provides Strategic Marketing and Broad Market Exposure

M&A Advisors create targeted marketing strategies that go beyond the generic business listings typically provided by Business Brokers. For example, in addition to producing a professional pitchbook, Woodbridge International also creates a custom marketing video for each client.

“One big advantage to Woodbridge’s approach is we got marketed to a huge number of buyers, and that’s exactly what I was looking for. I wanted a large selection of potential buyers to choose from because finding the right fit for us was extremely important.”

Rick Hannasch, CEO of Magnum Engineering & Controls (sold via Woodbridge International in 2019)

Crucially, a seasoned M&A firm will have a strong network of private equity group and independent buyers across various industries globally. Woodbridge International has a 750,000-strong database of buyers around the world, and we utilize this network to reach potential buyers who align with the unique characteristics of each seller’s business.

M&A Advisors are Experts at Deal Negotiations

M&A Advisors bring negotiation expertise to the table, which is particularly crucial in mid-sized transactions with complex deal structures. Their skills extend beyond basic price negotiations, encompassing terms, conditions, and overall deal structure.

“The strongest aspect of the Woodbridge model, in our experience, was the closers: their professionalism; their patience; their dedication; their belief; the relationship they built with my partner and myself; and their commitment to represent us in the negotiations. They were exceptional.”

Paul Hamilton, former CEO of Micelli Chocolate Aztec Tooling (sold via Woodbridge International in 2023)

Balancing the interests of both buyers and sellers is an art. Skilled M&A Advisors ensure that negotiations are fair and mutually beneficial, fostering positive relationships between the parties.

M&A Firms Provide Due Diligence Support

Identifying and addressing issues during due diligence is critical. M&A Advisors play a central role in due diligence processes, ensuring that all aspects of the business are thoroughly examined. This includes financial records, legal compliance, contracts, and any potential risks. M&A Advisors work proactively to develop mitigation strategies, minimizing the impact of potential challenges on the transaction.

M&A Firms Ensure Tax and Legal Compliance

Selling a business involves various tax and legal considerations. M&A Advisors bring tax and legal experts to the forefront of the process, ensuring that the business complies with all regulatory requirements. This involves reviewing tax liabilities, contracts, licenses, and addressing any outstanding legal matters.

By assisting clients to navigate this complex regulatory landscape, M&A Advisors reduce the potential for tax and/or legal obstacles that may thwart the sale of the business.

M&A Firms Ensure a Smooth Transition and Post-Sale Support

M&A Advisors assist in developing comprehensive transition plans, ensuring a smooth handover of operations from the seller to the buyer.

Beyond the transaction, M&A Advisors offer post-sale support, providing consultation to both buyers and sellers during the initial transition period.

M&A Advisors Are the Ultimate Strategic Partner

It’s clear that the role of M&A Advisors in facilitating mid-sized transactions is not confined to merely listing a business for sale. Their involvement is a holistic and comprehensive journey, guiding business owners through strategic planning, financial analysis, operational enhancements, stakeholder management, negotiation, due diligence, and post-sale support.

In the complex world of mid-sized M&A transactions, M&A Advisors stand out as strategic partners, leveraging their expertise to ensure a successful and lucrative outcome for both buyers and sellers.

Interested in speaking to a M&A expert about your business? Woodbridge International offers free valuations for businesses with an annual revenue of $5 million-plus. Our team of M&A Advisors is always available to answer your questions. Contact us today to set up an obligation-free meeting.