By Max Friar
- 70% of M&As close no more than 3 deals per year!
When the time comes to sell a business, no matter the reason – retirement, burn out, other business opportunities – owners are concerned with the final result: a quick, smooth, confidential sale to the right buyer for the best price and terms. A lot of brokers tout their “proprietary process” or the credentials of their team members when attempting to solicit new clients. While no doubt the experience of the M&A team and their methods of operation are important, Calder Capital believes that the end result is what matters most – successfully closing the transaction to the satisfaction of the client!
If you agree that successfully closed transactions are the goal, then you should agree that choosing your broker/M&A advisor based on closings should be a priority. So, perhaps the most important question to ask a prospective M&A Advisor is: “In the last 12 months, how many transactions has your firm closed?”. While you might expect most brokers to say 5, 10, 15, the truth may shock you.
Here is the truth: Most M&A firms complete between zero and three transactions per year. According to 2013 data Sutton Place Strategies compiled about middle-market deals, of 637 North American active M&A Advisors, more than 300 of them closed only one deal that year. While larger brokers like Raymond James and Houlihan Lokey closed 41 deals in 2013, 70% of M&As closed no more than three. Read that again: a majority of M&A’s closed only 0-3 transactions in a full year’s time.
In the twelve months preceding November of 2016, Calder Capital has successfully closed 14 transactions. Equally as important, our associates closed an average of two to three deals per year individually. We accomplished this because Calder has both the follow-through and the networking contacts to make these sales happen. As a business that wants to have more business, it’s our goal to close transactions, not make introductions and “hope” it works out. We’ve discussed what differentiates an “introducer” from an M&A advisor, but in essence, our strategy involves:
- Expanding our network of buyers every single day.
- Screening our buyers to determine if they are serious about an acquisition and able to make that kind of commitment before making an introduction to a seller.
- Compiling all necessary client documentation in a way that is both comprehensive and interesting to potential buyers.
- Marketing confidentially, yet aggressively, to our wide network of buyers and professional advisors.
- Working closely and determinedly with our clients and buyers to get the deal done.
This means that we market a business to tens of thousands of potential buyers, typically 50-100 buyers will typically request further information, 30-50 of these will sign a non-disclosure agreement and become qualified to review information. Of those, 15-20 will request an introduction to the seller or a showing of the business. Generally two to five buyers will submit offers, and two of those will be in line or better than our expectations in terms of price and conditions. After that, another successful transaction is concluded.
This is the way Calder works for our clients, and it’s how we are able to close 10+ transactions in one year. If you’re concerned about how the selling of your business will go or frustrated with what your current broker is doing or not doing for your business, please do not hesitate to give us a call. We are here to make successful sales happen. Contact us today!