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The role of an advisor when borrowing

Buying or selling a business is one of the most important decisions. Learn about the role of an advisor when borrowing.

"I know my business".

"I know my bank".

"I’ve been with my lawyer and accountant for 20 years".

"Why do I need to waste money on advisor fees?"

Many have regretted those comments!

Buying or selling a business, or making an acquisition are some of the most important business decisions. And, getting it wrong can be disastrous.


Why do you need an advisor?

1. Expertise

Helping people and businesses borrow is their day job.

An existing accountant/lawyer may be excellent for day to day transactions but despite what they might say how many deals like yours have they done recently: their expertise lies elsewhere.

So, before committing to your existing support: ask around; take up references.

If you want to still involve your existing advisors use them as a sounding board but appoint specialist advisors for this transaction.

2. Knowing who to approach for funding

A Corporate Finance or Debt Advisory advisor will have relationships with appropriate funders.

Just remember, your existing bank is not the only funder (and these days High Street banks have little appetite for debt that isn’t secured or Government supported). So, in the long term, you are better off looking into more options anyways, that an advisor can support with.

3. Negotiating

Even with a ‘friendly’ deal, e.g. a MBO, an external advisor can provide much needed ‘distance’ and objectivity between the vendor and his MBO team.

In most of these cases, emotions can rise and personal relationships can be damaged – particularly difficult if the transaction doesn’t happen and you have to carry on working with each other. 

4. Deal management

The transaction will be time consuming and, especially towards the end, almost all consuming.

So, let someone else, who has done it many times before, manage the deal – you still have a business to run! 

Where do you find an advisor?

  • A friend down the pub or at the golf club might not be the best place to start!
  • Searching online will provide a myriad of suitable names locally, but regional trade magazines help narrow the search down (e.g. Insider magazine produces a Corporate Finance Guide online).
  • All national and regional accountants and lawyers have excellent websites. Look for ‘tombstones’ or summary details of similar deals they have recently completed.
  • Speak to your existing professional contacts.
  • Speak to others who have completed a similar deal.



Author: Stuart Watson

February 2022

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