Why Transaction Advisory Services are Critical to a Successful Sale

It doesn’t matter who first said it, and there is disagreement, but the old adage “he who represents himself has a fool for a client” rings true across the centuries. Unless you’re accused of murder, that “fool for a client” thing is probably never more important than when there’s money at stake. Your money. Your family’s independence and security. That’s why at SDR Ventures we don’t simply suggest that business owners considering a sale enlist a team of advisors – before, during, and after. We preach it, live it, and believe it.

Everyone has heard the contrarians. Who knows the business better than the owner? Why should a transaction advisory service, M&A advisors, handle and guide the sale? You’ve learned other things on the job. How can this be any different?

While successful entrepreneurs are experts at running their business, they’re most likely not experts at selling a business. For many entrepreneurs, their business is the largest asset they hold and an asset that valuable can’t be handled lightly. Where do owners even start when establishing a fair sale price? One frightening study found that 98% of small and mid-size business owners have no idea what their business is worth.

Yet while business owners question the value of bringing on a transaction advisory service, everyday homeowners across the country routinely understand they need a pro on their side when buying or selling real estate. In 2024, only 6% of home sellers went it alone, and a home is an asset they can judge the value in a few minutes on a website like Zillow. Maximizing the value of a business is a lot more complicated.

• Before the Sale: Experienced advisors help sellers understand and document their value, growth, repeatable and consistent business model.
• During the Sale: Research market conditions and sales environment, identify and attract bidders (the more the better), confirm a bidder’s ability to complete the sale, shape the deal (most deals are not all cash).
• After the Sale: Help sellers transition to life after the business. What’s the next chapter look like? Work with the seller’s team of financial and tax advisors to limit tax considerations and ensure the proceeds of the sale are positioned for potential growth.

Transaction Advisors Set the Price (to Put More Money in Your Pocket)

After investing years in your business – long nights, frustrating roadblocks, shifting consumer tastes, and economic uncertainties – you’ve earned the right to the best return on investment you can get. Numbers don’t lie. Studies show when companies hire the very best advisers to sell their business, they usually get a noticeably better price. On average, those top advisers can help sellers walk away with 20–30% more value compared to deals handled by less experienced advisers. With lower-tier advisers, the results are all over the place — sometimes a small bump, but other times the company actually sells for much less than it could have.

Working with a team of professionals well before you decide to sell – or before someone shows up with an unsolicited offer – sets your expectations. It’s more than a gut feeling that you’ve got a good operation going. Sellers will want to see demonstrated value, dependable profits, a repeatable business model, a solid customer base, and consistent year-over-year growth.

If you don’t know what your business is worth, both today and in the future, it’s impossible to know what a fair sale price is. Not knowing can derail your exit strategy, or worse, leave money on the table.

You Do Your Job While We Do Ours

Selling a business is work and it’s time consuming. It can take months or longer. And deals fall through for any number of reasons. If you’ve been distracted by negotiations in that tumultuous time and let your business slip, it can take years to build it back up and try again. Clients or employees may get word and move on, or the ongoing focus on bringing in new customers can get lost. Turning the sale process over to transactional professionals keeps business owners doing what they do best: running their business. Protecting the value of a business throughout the exit process is vital. Nobody can do that better than the owner.

The “Other Guys”

To steal a phrase from politics, “if you want a friend in business, get a dog.” Business deals aren’t about friendship. They’re about money. And buyers aren’t in the business of making donations. The team on the other side of the table are professionals and they are there to make money.

Private equity firms, the deep pockets controlling some $9 trillion worldwide, hire savvy professionals to help them make deals on their terms. Walking into that phalanx of deal makers without your own skilled team can feel like showing up at the O.K. Corral with a water pistol.

The Three C’s

As professionals who have guided scores of business owners through the process, we believe in the underlying bedrock of “The Three C’s:” Consideration, Certainty, and Closure. Consideration means knowing a business’s value, gauging the market, attracting multiple buyers (and encouraging them to compete) and structuring the sale. Certainty is separating the closers from the posers who waste your time, moving the deal along in a timely manner, and knowing when to move on to the next buyer if needed. And then closure. That’s getting the deal finished, the check in the bank, and helping sellers work with investment, legacy, and tax pros to manage their new liquidity and new life. Learning to live again after the sale is tougher than it sounds.

A Lifetime of Work Deserves a Full Reward

We’ve all heard stories of home repair Do-It-Yourself (DIY) jobs gone amuck. Real headaches and real danger. Now consider the pitfalls of a DIY business transaction. There are a lot of DIY myths in the M&A world. Don’t believe them. Before transitioning away from your business, before you get an unsolicited offer, think about the work and time you’ve put into your business and what you want out of it. Selling a business is a serious task that comes with consequences, good or bad. A team of trusted, experienced professionals can help accomplished business owners avoid fumbling the ball at the goal line with a mistake they can never undo.