No hard feelings: The personal aspect of the deal-making process

Beth Warner, Manager at FRP Corporate Finance, looks at the personal aspect of the deal-making process. Whether you are looking to buy or sell a business, or advising those involved in an M&A transaction, Beth’s article highlights the importance of a good match between professional advisors and clients.

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One of the key aspects that drew me to a career in corporate finance was the opportunity to collaborate closely with inspiring business owners, helping them thrive while navigating the inevitable personal investments intertwined with the challenges and rewards of M&A.

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‍The personal side of deal-making

Deal success is often measured quantitatively, be it through multiples, sale price or cash at completion. It can often be easy to forget the personal impact selling a business can have on its owner and the people around them.

Many of the businesses I advise are owner-managed, with the owner having poured much of their life and energy into making it a success. The business has likely been a key part of their lives for a long time and, in some cases, may feel akin to a member of the family. Because of this, selling a business has the potential to bring a cocktail of different emotions to the fore, from celebration and joy to anxiety and doubt which, without the right support, can easily derail efforts to secure a positive deal outcome.

How can advisors support clients?

From the outset, insight from an advisor brings the advantage of impartiality. By being one step removed from the process, a third party can provide the independent, objective thinking that helps provide clarity - particularly during the negotiation process, the emotions of which can often cause owners to lose focus or make poor decisions.

However, for this advice to truly resonate, open and effective communication is crucial. From the outset, advisors need to build a relationship where they are equipped to provide an open and honest assessment of the situation. This can help to avoid many of the potential pitfalls that arise during the deal-making process.

One example scenario I often see is when difficult information, such as a dip in trading results, needs to be passed to the buyer at a sensitive stage. When effective relationships have been established with both seller and purchaser, the advisor can better contextualise this information with the necessary analysis and narrative to mitigate deal disruption.  

A good match?

Support from an advisor that is a good emotional match can be a game changer. Of course, technical expertise and credentials are a non-negotiable requirement for every advisor - yet trust, rapport and chemistry should not be underestimated in helping to secure a positive outcome.

We support our clients through the lifecycle of the transaction, from the development of an initial strategy and negotiations to the celebrations of completion. This can often be a long process, so it’s important for business owners to choose an advisor that they feel comfortable with. With this in mind, I would always encourage business owners to start discussions with advisors in the very early stages to help build a strong foundation for an effective relationship.

Of course, deal-making is a multi-faceted process, and this forms just one of the many aspects that advisors must manage throughout the timeline of a sale. However, taking the time to build a positive relationship based on communication and honesty creates a strong foundation that can underpin a successful outcome for all involved.

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To find out more about FRP Corporate Finance and the work they do, click here. You can contact Beth directly on 01273 916 696, or by emailing her at beth.warner@frpadvisory.com.

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