Top 10 tips for choosing your Corporate Finance advisor
Selecting the right Corporate Finance (CF) advisor is a pivotal decision when preparing to sell your business. An experienced advisor not only maximises your company’s value and optimises the terms of any deal but also ensures you have a range of options that deliver choice of buyers. Drawing insights from industry experts, here are the top 10 tips to guide you in choosing the ideal CF advisor:
- Track Record and Experience
Evaluate their experience in handling transactions similar to yours, both in terms of industry sector and size of business. Ask for case studies or verbal references from previous clients to verify their expertise in your sector, even better – ask if they can arrange an informal meeting/ lunch where you can hear directly about their business sale journey, which will give you a real insight into what you have got ahead of you and the real relationship they build with their advisor.
- Technical Expertise
Ensure they have a strong grasp of the relevant financial, commercial and legal issues that could affect your transaction. An advisor with deep-seated technical expertise can help mitigate risks.
- Strategic and Tailored Approach
Ask how they will tailor their approach to your specific goals and objectives. Will they make assumptions, or make it their business to really understand everything that’s important to you? A great advisor should spend time discussing and understanding your goals, hopes and dreams, together with those of other stakeholders, and offer a clear plan outlining how they will position your business to achieve these.
- Independence and Impartiality
Ensure your advisor is independent and not influenced by conflicting interests such as reciprocal relationships with Private Equity firms or similar. Ask them to explain how they put your best interests first and request evidence of their impartiality in past deals.
- Meet the Team
It’s easy to be wowed by an impressive senior partner in a pitch environment, but to what extent will this individual actually be involved in the day-to-day activity of any sale exercise? To mitigate this, ask to meet the wider team of individuals who will be working on the sale of your business.
- Personal Chemistry
How do you get on with the people who will be advising you? Selling a business can be a tricky process, typically lasting for 8 – 10 months, and you will be spending a lot of time with your CF advisor, so it is critical that you feel some kind of “chemistry” with the individuals involved.
- Buyer Network and Market Access
Assess their ability to conduct thorough research and uncover buyers beyond the obvious candidates. A high calibre advisor should be able to demonstrate how they have successfully identified and engaged strategic buyers globally, expanding the pool of potential acquirers to maximise value.
- Negotiation Skills and Deal Structuring
Your advisor should be an expert negotiator, capable of structuring deals that optimise both price and terms. Ask for examples of how they have negotiated maximum price and improved terms for past clients.
- Communication and Responsiveness
Selling a business is a complex process, so your advisor should be highly responsive and proactive. Assess their availability and commitment to keeping you informed throughout the transaction.
- Fee Transparency and Alignment of Interests
Understand their fee structure and ensure it aligns with your interests. Avoid hidden fees or conflicts of interest that could impact their motivation to achieve the best possible deal for you.
Scoring Your Advisor
Consider scoring potential advisors on each of these ten points (e.g., 1 to 5) to create an objective comparison. A higher total score should indicate a better fit for your business sale objectives.
Choosing the right Corporate Finance advisor can make the difference between an average and an outstanding deal. By using these criteria, you can make a well-informed decision to both maximise the value and optimise the terms of your business sale.