The decision to sell your business can be overwhelming. As David Allen says, “You can do anything, but not everything.” Luckily there are professionals available for help – popularly known as brokers or deal consultants. So, who are consultants? They are deal experts, usually with multi-disciplinary expertise in one or more of the following areas: law, taxation, economics, marketing, accounting, finance and negotiation.
A deal consultant is primarily responsible for deal sourcing – i.e. enabling prospective buyers and sellers discover each other and carrying out match-making between buyers and sellers based on their preferences. In order to ensure a smooth transaction, the consultant stays tuned to his preferred industries and domains, specifically around the do’s, don’ts, and the compliance considerations in a deal. Sometimes deal consultants also help with legal advice, taxation strategy, pricing and valuation.
Top 5 Key Consideration for hiring an Consultant for Selling Your Business or Not
Should you hire a consultant for selling your small business? It depends on several factors, which are discussed below.
1.. What is the deal-size of your transaction?
Deal size is one of the primary considerations in hiring a consultant. Deal size or deal value refers to the price for which your business will be sold. While there is no hard and fast rule, in general if the deal size is below INR 50 lakhs, it might be difficult for you to find quality consultants who are interested in it, or even if you find one, their rates might prove to be too high relative to the deal size. However, if you are convinced that you absolutely need a consultant to manage your deal, it might be worth loosening your purse strings.
2. Is the deal in a niche industry?
Do you belong to an industry which is niche, and hence finding buyers and managing deal compliance is challenging? In such a situation, having a consultant on board is often the best way to go about it. Remember to hire a consultant with experience and knowledge in your specific industry and make sure that he has a proven track record of managing deals of your size. It is possible that you may need a consultant only to source a buyer and not for managing the deal, in that case you can also onboard consultants at more affordable rates.
3. Do you have any experience and / or expertise in selling a business?
Are you a pro-seller with experience of selling one or more businesses, or are you a deal professional yourself? In that case, you will probably not need a consultant. However, remember that your expertise of selling a business in the past may not necessarily help you in selling your current business, as industry standards may differ widely and applicable compliance provisions are updated periodically, which you may not be aware of.
4. Are any good consultants accessible to you at affordable rates?
Availability of consultants is a key factor. Good consultants who have a proven track record, are professionally qualified, and have adequate industry exposure, are hard to find. A reliable way is to go by recommendations and references of people in your network. A consultant’s charges should also be affordable with regard to the deal size you are looking at, making it even harder to spot useful consultants.
5. Do you necessarily need a consultant for managing the entire deal?
Sometimes it is possible to cut corners and have a consultant who takes care of a few critical areas instead of the entire deal. For example, you may hire consultant to do any one or only a few of the following: source a buyer, negotiate a deal, valuation, compliance, taxation, etc.
The idea here is that instead of hiring a consultant for managing the entire deal at exorbitant rates, you can allocate specific functions to the consultant, and save on time and resources instead.
At IndiaBizForSale.com, we help sellers and buyers connect to consultants for securing deal services, and also have an in-house team to help with the overall deal management. To know more about what we do and how we can help you, please contact us here.