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Merger and Acquisition Advisors: Do You Need Them?

Published September 6th, 2022 by Cornerstone Capital Advisors

Owning a business is the culmination of hard-fought dreams for many people. They spend years fighting to make their business a competitive player in the market. It's a great feeling when other people see how hard you've worked and acknowledge the effort that went into making your business a success.

This acknowledgment can come from a thriving customer base. It can also come from an offer to sell or merge businesses. 

An offer to sell your business can be a welcome surprise. There are a lot of things to consider, and merger and acquisition advisors are the perfect resources to help you as you decide. If you're considering a proposal to sell your business, read on to learn how these advisors can help.

What Is M&A Advisory?

M&A is a broad term that encompasses the work that intermediaries do during mergers and acquisitions. Most of the work involved details advising clients when they want to buy or sell a business. An acquisition advisor will also do market research to help inform clients about the intricacies of conducting a transaction in a given market. 

They will also help businesses raise the capital necessary to complete a merger or acquisition. 

Some companies are skeptical of M&A advisors because they make their money from closing transactions. Keep in mind that advisors are also out to make money and the services they provide should reflect their dedication to providing quality service. 

How Merger and Acquisitions Advisors Help Businesses

M&A advisors help businesses when they are going through the process of a merger or acquisition. 

Companies contact advisors to help prep them for a business deal. They evaluate the company and advise them on how it should respond. 

Experienced M&A advisors can add value to a business, especially if they have no experience with mergers and acquisitions. 

Advisors will act as an intermediary on behalf of business owners to reach out to other business owners and corporate officers. They will inform business leadership of deal structure and company value. They will also take an active role in negotiations between both parties. 

They also have a network at their disposal to help inform them of the deal landscape. 

M&A advisory firms are also known by another name: boutique investment banks. 

This is because they not only assist with transactions, they also help companies restructure, raise capital, and advise them on other financial matters. 

Advisory firms can use their transaction consultation to advise businesses on their finances. 

M&A advisors can assist with, but are not limited to:

  • Merger and acquisition strategy development
  • Creating resources for marketing
  • Company valuation
  • Deal origination
  • Creating company target longlists and shortlists
  • Responding to offers of buying and selling
  • Third-party negotiations
  • Finalizing business deals
  • Preparing documents for business deals
  • Capital raising
  • Company restructuring
  • Post-merger integration

Why Should You Hire an M&A Advisor?

There are several main reasons you should hire M&A advisors.

Advisors are experts in mergers and acquisitions. These two fields are the most complex and expensive investments companies can undertake. There are so many things to keep track of during this process that you're going to want someone that already knows how to handle everything. 

The success of mergers depends in large part on the company offering the buyout. Advisors add value to the proposal.

CEOs and business owners will be the first to say that they have a good understanding of their industry. However, they may not have the awareness of an M&A advisor. Advisors spend a lot of money every single year to get their hands on market research.

The research they pay for concerns facets that extend beyond the workings of the industry. They also have access to transaction multiples, revenue and income of private companies, and a lot of other information.

Advisors also have many contacts. The skills they possess allow them to rub shoulders with people all over the world in many different sectors. 

If you want to acquire a business in Hong Kong and they have an office there, there's a good chance they know someone who knows someone that can assist you.  

How Much Does It Cost to Hire an M&A Advisor?

Investment banks have lots of resources at their disposal. They have astute lawyers and industry research, among other things. However, the cost of their services can run into the hundreds of thousands before the transaction sees completion. 

Once the deal goes through, it can cost tens of millions of dollars for a success fee. 

M&A advisors are perfect for the lower and middle markets. Advisors also tend to be flexible on their fees. In some cases, you may only need to pay them a success fee. 

Success fees are only 5-10% of the total transaction value. You get a lot of service from M&A advisors for only a fraction of the cost of an investment bank.

Your Go-to Financial Advisors

It cannot be understated how beneficial merger and acquisition advisors can be to a business. They have fundamental resources that can make the negotiations process much easier on both sides of a deal. Before you jump in, hire an M&A advisor to help you out.

At Cornerstone Capital Advisors Inc., we pride ourselves on our financial knowledge. We have many services, including mergers & acquisitions, asset-based lending, disaster loans, and more. If you need comprehensive financial services, contact us so that we can help assist you with whatever you need. 


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