Questions to Ask Before Hiring an M&A Advisor

The right M&A advisor can help you find the perfect buyer for your Dallas business, and support you as you navigate the sales process. But finding the right provider can be difficult. Like any other member of your team, you need to interview your M&A advisor. Here are 10 questions to get you started:

What is the fee structure?

Make sure you have a clear, concise, and specific understanding of how the firm structures their fees. Bad companies often want more money upfront when they know they’re going to struggle to sell the business. So look for companies that incentivize success with lower upfront fees and higher success fees.

Do you specialize in my industry?

You wouldn’t want an obstetrician operating on your heart, no matter how good they were. The same principle applies in M&A. Choose a specialist in your industry; they already understand the norms, big players, and standard sale prices. That means they can educate you, rather than wasting time with costly mistakes.

How will you price my business?

There are plenty of methodologies for pricing a business. What matters most is that your advisor can tell you the right methodology for your business, as well as their reason for choosing that approach.

How do you vet buyers?

Not all buyers are good buyers—or even serious about investing in your business. A good firm knows how to tell the difference between a competitor sniffing around your company, a pie-in-the-sky dreamer who has no idea what they are doing, and a truly serious buyer.

What do you do to protect confidentiality?

Confidentiality is the cornerstone of a successful sale. Without it, stakeholders can get spooked and competitors may gain an unfair edge. Ask what specific techniques the firm uses to protect confidentiality while still strongly marketing your business.

What is your marketing plan?

Listing your business is not enough. The firm must have a keen understanding of what makes your company special, so they can highlight these defining features. It’s equally important for them to have an ideal buyer in mind, so they can speak compellingly to this buyer.

Will this sale disrupt my business?

Buyers hate risk. That means they also hate seeing a sudden decline in revenues during the sale process. It’s more important than ever to keep your business functioning smoothly. This means the firm you choose must be willing to navigate the process without constant oversight, so you can continue focusing on growing your business.

Is the money worth it?

Don’t just look at the price tag for the firm you choose. Consider what value you’ll get in return. It’s often worth it to pay a little more for an exceptional firm than it is to shop for the lowest rock-bottom price you can get. The focus should be on value, not just expense.

Who negotiates the deal?

You’re the ultimate decisionmaker, but the firm you hire should help you with the basic details, including by educating you about how certain deal terms might ultimately affect total deal value. Additionally, the firm should be prepared to help you draft a letter of intent (LOI), which dictates many sale terms ahead of time so you don’t get bogged down in endless fruitless negotiations.

What is this firm’s reputation?

What happens when you Google this firm? Are customers generally happy? Or is there a trail of anger—or worse still, no trail at all? Ask around your industry to see what people think of this firm; if you don’t hear anything positive, or anything at all, they’re likely not qualified to sell your company.