Should I consider any Consultant to sell my business? 4 Key Considerations

“Do What You Do Best – Outsource the Rest”

Every business owner looking to sell his business has asked himself this question at some point or the other. If you are wondering how we know this, it’s because we have worked closely with thousands of business sellers over the last few years. So, who are these intermediaries? In simple terms, intermediaries are transaction experts, who can help with industry-specific deal sourcing, legal implications, taxation, accounting and negotiation. Finding a serious buyer and getting deal done in a timely manner is a tedious task especially while you are still running your business. Hiring an intermediary can free your time to concentrate on managing the business while the consultant would plan and implement the necessary leg-work for your deal. Obviously most intermediaries will charge a small retainer fee and handsome success fee, however generally this proves to be a well-spent investment.

Four Key Considerations For When To Consider To Use Consultant

Primarily, a consultant helps both business buyers and business sellers with start to finish transaction advisory, i.e. from preparing a business for selling to finally getting share purchase agreement signed. But how do you decide whether to hire a consultant or not? We are here to help you out – we have listed down a few factors for you to keep in mind when deciding whether to hire a consultant or not.

1. Deal Value

This refers to the price or the price range at which your business is expected to be sold. While there is no hard and fast rule – it is believed that for deals below INR 1 Cr. it might not be worthwhile to hire a consultant. This is because the consultancy fees might prove to be too much with respect to the deal value. Consultants usually charge a percentage of the deal value as a commission and a retainer fee in some cases.

Wondering what the approximate deal value could be for your business? Our blog here tells you everything you need to know about business valuation.

If you are in a niche industry and have no other way of sourcing buyers but to hire a consultant to manage your deal, it might be worth loosening your purse strings. However, if sourcing buyers is your only concern, you could try listing your business at first and explore the communication with investors.

2. Your Experiences

If you have prior experience of selling one or more businesses (either your own venture or a business owned by somebody else), or if you are a deal professional with expertise in closing business sale deals, you might not need a consultant. However, it might be useful to note that if you have not sold a business recently, the past experience may not necessarily or fully help you in selling your current business, as the industry standards could have changed, applicable compliance provisions could have altered, and you might not be fully aware of those.

If you are selling a business for the first time, these top 5 tips can make your life easier.

3. Availability of Consultants

Availability of consultants is another important aspect to be considered. As a matter of fact, good consultants with a proven track record and necessary industry exposure are often not easily available. A tested way to source good consultants is to request recommendations and references of professionals in your network whom you trust – but unless you belong to the business buy / sale network, it is unlikely that you will receive a lot of good recommendations.

4. Capabilities of Consultants

Suitability of consultants also depends on how prepared you are for your business transaction. Some consultants assists you in all stages such as  business preparation, targeting (i.e. prospecting investors), match-making (qualification & management meetings etc.), negotiation, structuring, and legal paperwork. Some consultants excel in certain stages only. Hiring of such consultants is very much dependant on your own readiness and availability of internal team.

Final Thought

We hope that this article helped clear the air for your query, if you need Consultant to sell your business or not. In the end, whether you choose to hire a consultant or not, both the decisions will involve a few risks. Focus on considering which scenario is more suitable for you. Most transaction gets benefited by having access to experienced intermediary, certain aspects of deal are negotiated better via them.

To know more about how to go about selling your business, stay tuned to our blog and other resources. Explore

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