In many cases the answer is “No.” There is no legal requirement that a business must be sold through an intermediary, and indeed, many thousands of businesses are sold every year without one.
If the buyer is a family member or a trusted employee, and the value of the business is mutually agreed upon, and the seller is going to carry most of the financing, the sale may be structured and overseen by a closing attorney, who is acceptable to both parties.
On the other hand, if the seller needs to realize the maximum possible proceeds from the sale to fund retirement or other plans, and doesn’t want to carry much, if any, of the financing, or if the buyer has a different opinion about the value of the business, then the seller may be well advised to engage the services of a qualified M&A advisor.
A qualified M&A professional can assist both parties in determining the market value of the business, and can also assist the parties in identifying possible sources of financing for the buyer to minimize – or even eliminate – the need for seller financing. If need be, an experienced M&A advisors can launch a confidential marketing campaign to attract other buyers based on the company’s merits as an investment.
An experienced M&A advisor can assist the parties in structuring the terms of the deal to maximize the seller’s net proceeds, which in the end is really much more important to the seller than the selling price.
An experienced M&A advisor can also serve as a facilitator and a buffer in the sometimes awkward and time consuming negotiations, freeing the seller to stay focused on running the business, and minimizing the risk that key employees, customers and suppliers will learn that the company is being sold.
Lastly, many M&A transactions that ultimately close seem to hit a brick wall at some point in the process when both parties retreat to their respective corners and are no longer even speaking. An experienced M&A advisor can frequently find a way to get the parties back together and ultimately close the deal.
If you know someone who’s thinking of selling or buying a business and who might benefit from a complimentary, confidential, consultation with us, have them contact me at mertel@lmaallc.com
By: Mike Ertel, Transworld M&A Advisors