As exclusive sell-side M&A advisors, we are sometimes retained after a seller has received an offer from a buyer. Even though we can invariably help the seller improve an existing offer, the greatest threat to the incumbent buyer is that we will bring in another offer at a higher value, or with better terms, or both. The buyer will then need to improve his offer or risk losing the deal. So, you would think that sell-side advisors would be scorned by buyers. But, wait, we can play a very useful role for the buyer as well as our sell side clients.
- Often sellers are not totally committed to a sale of the business, or may lack buy-in from all shareholders, resulting in a failed deal that is a huge waste of time for the buyer. However, if the seller has retained an advisor, there is a much deeper level of commitment, and resulting chance of follow through to getting a deal consummated.
- With good advisors, a seller is much less likely to waste the time of the buyer by focusing on the wrong issues. With deep experience in M&A, we know what battles are worth fighting and which are not, and what are the customary deal terms. Without good advice, unknowledgeable sellers are more likely to blow up a deal by ”majoring in the minors”.
- We will invariably provide a window for the incumbent buyer to improve their offer before going to a broader universe of buyers. If the deal is already at market value and terms, we’ll advise the client of that, and can help remove any doubts and chances for buyer remorse.
All in all, competent sell-side advisors can help facilitate a deal acceptable to both sides, acting as valued “intermediaries” in the process.