What Does an M&A Advisor Do?

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A brief intro to M&A advisory services

An M&A advisor is a financial professional who provides advice and assistance to companies considering mergers or acquisitions. An M&A advisor typically has a background in investment banking or accounting and has close relationships with private equity and venture capital firms, and other dealmakers to source potential acquisition targets or investors.

They typically earn a percentage of the total transaction value they advise on known as success fees. The success fee incentivizes the M&A advisor to maximize the transaction value for the seller and is only paid if the deal is completed, thus aligns the interests of the client and the advisor.

An M&A advisor can advise both the seller (target), known as sell-side M&A, and buyer (acquirer), known as buy-side M&A. While each transaction has its uniqueness, the core services provided by an M&A advisor are the followings:  

Prepare marketing materials

The development of marketing materials, such as teasers or investment memorandums (IMs), is critical to generating interest among potential buyers by presenting the business and the industry. An M&A advisor can help highlight the company’s unique selling points while ensuring that the larger audience understands the value of the business. The document usually includes an executive summary, company information, industry landscape, and transaction schedule. A well-developed marketing materials is essential to generate interest from potential buyers and ultimately sell your company. Reliance on the expertise of an M&A advisor can ensure that the right data is being shown and can save considerable time and energy for the target company.

Connect buy-side and sell-side

Through their extensive network, an M&A advisor has access to a broad list of potential buyers and sellers. They have valuable insights into their preferences and behavior, know how to market to attract attention, and serve as a matchmaker between the target and the potential buyer.

Support in due diligence

Due diligence is a highly technical activity and a vital part of the M&A transaction. Working with an M&A advisor ensures that the right data is being collected, analyzed, and presented in the appropriate format. Due diligence involves gathering, analyzing, and interpreting the target’s financial information, analyzing historical and projected financial results, evaluating potential synergies, and assessing operations to identify opportunities and areas of concern.  

Conduct negotiations

An M&A advisor plays an essential role in the negotiation process between the two parties. They are experienced in handling such negotiations and know what the right questions are to ask and what critical documents to prepare. This allows them to provide valuable support and assistance to the client throughout the process. During the negotiation, the usually discussed topics include valuation, allocation of risk and responsibilities, collection of any additional information (if needed), and setting out the consequences to each party if things go sideways. With the M&A advisor’s help, both parties can reach an agreement that is beneficial to them and avoid any potential problems that could arise from the transaction. 

Close the deal

An M&A advisor plays an essential role in helping close a deal by assisting in preparing the sale and purchase agreement (SPA). This document contains vital information about the transaction, including the description of the assets being sold, the terms of a contract, the responsibilities of each party, and any conditions that must be met. By ensuring that all this information is clearly laid out in the SPA, an M&A advisor can help to prevent misunderstandings and ensure that the deal goes smoothly. In addition, the SPA can act as a roadmap for the post-transaction period, helping to ensure that all parties uphold their responsibilities and meet their obligations. As such, an M&A advisor plays a vital role in helping to create a successful and seamless transaction.

Summary

M&A advisors are experts in the M&A process and can play a vital role in ensuring that the transaction will go through and be successful. Their expertise throughout the entire process, from preparing a teaser to assisting with the negotiation and closing the deal, can save considerable time, energy, money, and risk for the parties involved. Bringing in a trusted team of dedicated experts allows the buyer/seller to remain focused on operating their business and minimize their duties regarding the M&A transaction.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.