Selling a software or technology business can be a daunting task, especially when it comes to mergers and acquisitions (M&A) transactions. These processes can be time-consuming and burdensome for decision-makers and the management team. The lack of familiarity with the nuances of the sales landscape can complicate the process and result in higher probabilities of deals falling through or sellers leaving millions or tens of millions of dollars on the table.
Why Hire an M&A Advisor?
An M&A process can distract from the list of items required to operate a business. Hiring an M&A advisor allows founders to focus on what they do best: growing their business. An M&A advisor can enable founders and management teams to focus on their core competencies, while the advisor handles the sale process, increasing the chances of a successful transaction.
2. Stay Focused
Advisors undertake an immense amount of work in preparing marketing materials, crafting a clear picture of the business, and structuring the stages and timeline of the M&A process. Redistributing these responsibilities allows CEOs and other key stakeholders to avoid dealing with transaction obstacles, which can sap their energy and distract them from other areas of the business.
3. Save Money
By not bringing in an advisor to properly present information, build a process, and de-risk deal dynamics, founders and management teams run the risk of jeopardizing the transaction altogether. An M&A advisor can help you identify the best offers and negotiate key deal terms, ultimately ensuring that the transaction is fair, transparent, and acceptable to all parties.
4. Risk Reduction in Due Diligence
M&A advisors ensure buyers are doing the appropriate level of diligence to understand business dynamics. Advisors are experts at pushing buyer diligence upfront as much as possible, enabling sellers to differentiate bids on factors other than value. This can reduce the risk of the deal falling through or including unfavorable terms.
5. Global Relationships
M&A advisors have access to a broad list of potential buyers and insight into their preferences and behaviors. They can create a competitive sales environment, market the business to attract attention from existing relationships, and serve as a matchmaker if the business owner is picky about who buys their business.
6. M&A Transaction Expertise
An M&A advisor with a wealth of experience in the software or technology industry is integral to the success of a sale. Advisors are laser-focused on each stage of the process, drawing from their wealth of experience, pattern recognition, industry relationships, and a devoted team to ensure the proper steps are taken to drive the transaction forward.
7. Won’t Leave Money Behind
Self-representation drains the time of founders and management teams who typically don’t have expertise in running an M&A transaction and ultimately leads to a lower probability of closing a deal and a lower valuation. By bringing in a trusted team of dedicated experts, a company can be confident it can remain focused on its business performance while still working toward a favorable outcome.
8. The M&A Process
Managing communications and relationships, the information and analysis shared, and the timing and steps of a transaction are some of the areas where advisors can add tremendous value. Experts know what levers to pull and when to reduce the risk of a transaction and how best to navigate the sales landscape with greater confidence and certainty.
In conclusion, selling a software or technology business can be a daunting task, particularly when it comes to the M&A process. By hiring an M&A advisor, you can benefit from their expertise, save time and energy, reduce risk, and leverage their existing relationships and industry-specific knowledge. Ultimately, working with an M&A advisor can help you achieve a more successful outcome and maximize the value of your business.
As you consider your options for selling your software or technology business in 2023, it’s important to keep these benefits in mind and choose an advisor who can help you navigate the sales landscape with greater confidence and certainty.