Divestitures, Acquisitions & Strategic Plans – Building Value

With the rising confidence in the marketplace, there has been a renewed interest in acquisitions. Can an Advisor help with your acquisitions? If you are considering an Advisor for your Acquisitions, here are some of the Benefits and Pitfalls to consider:

Benefits of an Advisor:

1. A Comprehensive Search for the Best Acquisition.  A good Advisor firm will work with you to set a disciplined approach, strategy and criteria for the best targets.  Then they will conduct a discreet search on your behalf, short-listing a hundred or more prospects.
    
2. Getting to a One-on-One Deal.  Many times deals will be brought to you, but they often are being seen by many other buyer prospects like you.  If you have your own Acquisition Advisor, you have a good chance to get into a one-on-one situation.
    
3. Achieving a Better Price and Better Terms of Sale.  An experienced Advisor firm should be able to obtain a better price – and other terms of the purchase – than if you do it yourself.  They have a proven negotiation strategy and know the pitfalls to avoid.
    
4. You can Stay Focused on Running your Business.  It is common for the Acquisition process to consume 50% to 75% of the CEO's time for a period of up to 12 months.  With a trusted Advisor firm you can stay focused on your business.
    
5. An Advisor can Discreetly talk to Competitors.  Your competitors may be potential targets but contact has to be handled properly. An Advisor can talk with several competitors at the same time without revealing your identity.
   
6. Assistance with Financing.  A good Advisor firm can help you with the Financing.  They should know financial institutions who are keen, as well as the current deal terms and rates.
   
7. Crossing the Finish Line.  An Advisor firm helps ensure the deal gets done. They are focused on keeping the process moving. They act as a buffer between you and potential target acquisitions.  And their experience helps find solutions when problems arise.
   
8. A Sounding Board for You.  The Acquisition process may not be an everyday event for you.  An Advisor firm can be a valuable Sounding Board for you and your team. An Advisor also provides a professional level of objectivity with your acquisitions.  In addition, an Advisor firm can help with your valuation assessment.
   

Pitfalls to Avoid:

1. Are they Experienced? Do they understand your business? Do they have operating experience? How are their people skills?  What is their track record?
   
2. Will the Advisor earn their fees?  The fees paid to an Advisor often include a healthy retainer, monthly work fees, and a percentage of the purchase price on closing. At Corplan our clients only pay for success, other than a small retainer.  

Brian Hamilton is the CEO of CorpIan Advisors Inc, a Calgary-based firm dedicated to helping Owners and CEOs of mid-size companies in Western Canada cross the finish line smiling with their Divestitures, Acquisitions & Succession Plans.