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.
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.
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.
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.
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!
Author: Stuart Watson
Latest News & Insights
Everything you need to know about all things SME Capital straight to your inbox
Sign up now
What is a Management Buyout (MBO)?
Management Buyout (MBO) is a process in which a company’s key management team acquires all or part of the company they manage.
Acquisition Finance – 15 Pitfalls to Avoid
There are pitfalls for potential borrowers to avoid when it comes to putting in place the debt piece of the funding structure.