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With over 30 years of experience in mergers and acquisitions, Christopher Riley has seen his share of mistakes in the negotiation. One of the most common, according to Riley, is contacting an investment banker before the company is ready to sell.

“It’s the last thing you really should be doing when you’re going to sell your business,” Riley says. “Unless you have already implemented what we call a strategic exit plan. Investment bankers are great at what they do, but they can’t improve the value of your business. So you need to get your business value where you think it will be maximized on an exit.

Riley said his group called it an “attractive acquisition” before contacting an investment banker.

“They’re going to put the CIM (Confidential Information Memorandum) together,” Riley said. “It is going to be auctioned and you will be presented with several opportunities. And if those numbers aren’t where you want them to be, you should never start the process in the first place. That’s why we like to say it’s the last call once you’re all geared up and ready to go.

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Almost any M&A adviser will tell you that it takes years to prepare a sale, but Riley says that’s not always the case. When asked how long a business needs to prepare, Riley says it depends.

“The best answer is knowing when you can choose the optimal time for your business to be the most attractive in the market,” he says. “So if it’s already there, if you killed it and you’re on top, well, you should implement a trade right away. So maybe you don’t have to do anything, you just need to wrap things up nicely and let the investment bankers do their thing.

On the other hand, if the business has lost a step or the pandemic has caused a lot of issues with your supply chain, you may need to reassess to achieve that optimal value.

“If you need to get more recurring revenue, or if you need to clean up some things with your business before going to market, it could be six months, nine months, 24 months,” he says. “If you’re really in a bind and you’ve been running your business for 30 years, you don’t want to take a 20% hit just because of the bad timing of a pandemic. So you should really come up with a good plan for growth and put it back in place before implementing a transaction.

Riley spoke on the Smart Business Podcast about being prepared before approaching an investment banker. Press play to follow the entire conversation.