Question 1

How long is it going to take to close a deal?

Accepted Answer

We often hear stories of sale processes that take a year or more. It just shouldn't happen, and usually results from a poor alignment of the M&A Advisor and client, poor preparation, or both. We strive to follow a 4-month sale process in all of our engagements. Within 2 months from engagement, our clients receive tangible feedback directly from buyers in the market (and typically some early offers).

Question 2

Our numbers have been impacted by Covid, can we still sell now, or do we need to wait a few years?

Accepted Answer

We have had multiple clients that have experienced a once in a lifetime 'blip' in their top and bottom line, and asked this same question. In multiple cases we have managed to structure around these anomalies and help our clients maintain 100% of their 'pre-Covid' valuation.

Question 3

How do you know what our business is worth?

Accepted Answer

We talk ourselves out of more client engagements than we should, as we will NEVER over promise on valuation to get your business. We use multiple global databases that provide us with access to all transactions in your space in the last 5-10 years in determining your valuation. While we may agree together on an acceptable purchase price and structure, we always let the market provide their own indications of value in order to maximize the price. In the end, the market determines the ultimate purchase price, and we can promise that your acquisition opportunity will be in front of anyone that makes sense, globally. We would be happy to meet with you, ask a few questions, and give you a preliminary opinion on valuation/structure for a sale of your company within a day or two.

Question 4

How do we get updated on your progress in the market?

Accepted Answer

We have invested in and implemented in an advanced cloud-based CRM system with which we track all of our outreach to and interactions with targets on your behalf. We generate regular, highly detailed reports on our activities and progress (typically weekly or bi-weekly).

Question 5

What about confidentiality— we don't want our staff and competitors knowing we are for sale?

Accepted Answer

Confidentiality is the cornerstone of our business. If we let our clients down by failing to manage their concerns over their information ending up in the wrong hands, we would not be in business very long. When marketing an acquisition opportunity, we approach prospective buyers with a non-descript "one pager" or "teaser", which does not name the company, or give away any obvious information that reveals their identity. Only upon heavy buyer qualification and signing of a non-disclosure agreement ("NDA), would a target receive additional information. All information provided is typically done via a password protected online data room that we set up and manage on behalf of our client. We can be as confidential as required when dealing with your team. We have managed to keep the sale process confidential from key staff all the way up to just days before closing a sale.

Question 6

Are we going to be in meetings and Zoom calls all day for months on end?

Accepted Answer

We are motivated and compensated in a manner that keeps us focused on getting a deal closed as quickly as possible. Our goal is not to line up as many zoom calls or meetings as possible to make it "look" like we are working hard. We heavily qualify all prospective buyers to make sure they are active buyers, have the resources to complete the acquisition, know the timeline, and understand valuation/structure expectations. Only once they have been fully qualified would they be on a call with our client. We have recently closed transactions with as few as 6-8 calls between our client and pre-qualified buyers.

Question 7

How many buyer targets are you going to reach out to?

Accepted Answer

We prefer the laser to the shotgun. Many M&A Advisors employ the "spray it and pray it" approach, sending out teasers to hundreds or even thousands of targets on email lists. At WDC, we typically focus in on a well curated list of less than 100 targets, employing a "one-to-one" approach, communicating directly to C-level executives, board of directors, or trusted advisors at the purchaser. Buyer targets can tell the difference and respond more positively to this more thoughtful approach.

Question 8

Are we going to have a fresh business school grad leading my file?

Accepted Answer

As we only ever work on two client engagements at a time, you will never become just another client in a stack of files on a desk. Your mandate is a critical part of our business and you will always have one or two Managing Director level "owners", (grey hair included) as primary contacts on your engagement. All initial meetings, and ongoing negotiations are led by a Managing Director. Unlike the big Bank or Consulting Firm shops, we are owners, we are not going anywhere, and we are certainly not going to leave for another shop during your engagement (it happens, often). When things get hard or complicated, we do not hand your project off to a junior to focus on easier work—when things get tough, the whole team doubles down and digs in harder to get it done.

Question 9

How much is this going to cost?

Accepted Answer

M&A Advisors typically charge a "Work Fee" and a "Success Fee". The Success Fee is equivalent to a percentage of the total purchase price negotiated for your company. Success Fees range anywhere from 1% at the low end, up to 8% or higher at the upper end, completely dependent on the size of the company and the complexity of the project (very large transactions will be at the lower end of the scale, while smaller transactions will be at the higher end. Work Fees cover the Advisor for the cost of putting a team on your project and are usually paid monthly up until the transaction closes. To create maximum alignment with our clients, we charge a relatively small monthly work fee, and only for the 4-month process outlined above. Our motivation is earning Success Fees when we complete transactions for our clients versus chasing monthly retainers. We look to get the big payout when you do. Remember, if you think it is expensive to hire a professional, wait to you see how much costs when you hire and amateur.

Question 10

It seems it would be way cheaper to bring someone on internally to manage the sale process?

Accepted Answer

This makes really good sense on paper; pay someone by the hour or a salary to manage the process. It is much cheaper than giving up a few percent of the value of the company to an M&A Advisor. In practice it is a bad decision, that invariably ends up costing you more (or results in a failed sale process altogether). First, you have no means of managing confidentially/anonymity in the marketplace, as someone is calling directly from your company! Your menu of negotiation strategies becomes severely limited also: 1) buyers will typically provide an Advisor with far more candid feedback than they will provide to the company directly, 2) the value of the "multi-level negotiation", where they Advisor serves as a conduit/buffer to their client is completely lost, 3) when working with an Advisor, you are working with a team, with (hopefully) decades of deal experience and proven negotiation/structuring strategies up their sleeve. This allows you to focus on your business and not get distracted. The cost of hiring an experienced M&A Advisor is usually made up in that same Advisor negotiating a higher purchase price (or a cleaner structure) by organizing a proper stable of bidders. There have been many studies confirming this situation, with Advisors typically arranging valuations 25% or more versus companies going it alone.

Sell-Side M&A Advisory Services

Below we answer some of the most common questions we are asked by companies looking for a "Sell-Side" M&A Advisor, which we hope will provide some valuable information and help you understand how WDC's "secret sauce"