The next big question: Should you get an M&A specialist who is an expert in the industry?
Then ask yourself, “Should I get a specialist for anything?”
You may be the business owner who looks for people with the most expertise in an area, even if it costs a little more. Conversely, you may be the owner who has operated on the cheap, getting someone with a minimal amount of expertise and hoping they can get you through the challenge.
Either way, you’re going to get what you pay for. Keep in mind that with a business exit or sale, experience is critical, particularly with regard to:
● The business you’re in and your competitors
● The strategic buyers who are interested in your niche
● The overall industry and what the future holds
From the very expensive mistakes I’ve experienced through personally buying, building, owning businesses for over 25 years, the idea that you can have M&A expertise without industry knowledge, experience and connections is foolish at best, and a real threat to your well-being at its worst.
How Little Expertise Can Cost You Big-Time
Let me give you an example. I’ve had several sellers approach me recently, distraught over their experience with a business broker.
They had both signed with a generalist for a one-year contract to sell the business. What they didn’t realize was their contract with the broker included a “tail,” which stipulates that if a business isn’t sold in the first year and the seller resigns with a different broker, then the original broker would still be entitled to a commission.
The generalist charged an up-front “exclusive” fee of $50-70,000, and didn’t even meet the owner at their site. He spent a year making half-hearted attempts to sell the business, with no success. Then he relied on the “tail” to kick in after a year of floundering. So the broker didn’t do his job AND got paid for it.
There is a yin-yang balance between understand how print business sales are initiated and successfully transfer. If you have someone who understands the industry, they might get lost in the technical aspects of an M&A.
The same holds true for the generalist business broker, who has no industry experience or industry-specific connections to connect personalized and targeted marketing campaigns for the seller.
My recommendation? Go with both. Find a specialist with experience both in M&A transactions AND industry expertise. Likely these will be established pros with a solid team surrounding them.
Rock LaManna is the author of L&NW's popular column, The Bottom Line. Rock helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. He is President and CEO of the LaManna Alliance, and provides guidance on how to grow a printing business, merge with a synergistic partner, make a strategic acquisition, or create a succession plan. Rock can be reached by email at Rock@RockLaManna.com.