A common trend among those looking to sell their business is to avoid hiring a local M&A intermediary. The reasoning behind this precaution is because a local M&A firm may be highly involved in the community, and perhaps leak the news of the sale to the target’s niche market. The news of a sale leaked to the public is cause for concern among those looking to sell their business, because it has the ability to harm the reputation of the business and therefore cause the valuation to go down. Consequently, it is common for a business owner to want to avoid anyone who they sense may mistakenly share this information within the community.
However, there is also a case against choosing an M&A intermediary that is at a far distance from the business in question. The relationship between the business seller and the M&A intermediary should be intimate, as an advisor tends to be more invested when more closely involved with their client. An intermediary within close driving distance will be able to take a more hands-on approach to the valuation of the company and the closing of the transaction. A local advisor has the ability to swoop in if the deal begins to turn sour—though not as easily when the rescue involves airfare and a potential disruption of the parties’ schedules. The bigger the seller’s company, the less concerned they may be about footing the bill for a long-distance expert. However, smaller businesses may not see this as a necessary expense. The advisor’s capability to work on face-to-face negotiation tactics may make the difference between a successful deal and a failure. Time does tend to kill deals and personal interaction tends to foster a better relationship.
For the same reason that a business owner may not want to work with a local M&A firm (because the community may hear about it), the advisor also has the luxury of giving up on a difficult deal with fewer repercussions (because the community will not hear about it). Therefore, this is further incentive for sellers to reconsider the idea of hiring a long-distance M&A advisor.
Many M&A advisors will take on long-distance clients and claim to work well remotely because they do not wish to turn down business. However, a personal connection and investment may be missing.
In all reality, the M&A intermediary that a business owner hires to help them sell their business should be highly focused on maintaining confidentiality, no matter where they are located. When making the decision on which firm to hire, it is vital to select an intermediary that will sign a confidentiality/ non-disclosure agreement with the client before even beginning work together. The confidentiality agreement should negate any concerns over location.
Here at George & Company, confidentiality is the operative word. Before you even begin correspondence with us, we invite you to request our intermediary confidentiality/non-disclosure agreement. That way, we may contact you in complete confidence. We are here to ensure that your M&A deal runs smoothly and privately.