M&A: How to Use Inside Advisors - dummies

By Bill Snow

The most obvious set of team members for M&A deal-makers is the inside team — that is to say, those employees who already work for the company. Working with inside advisors makes sense because they don’t represent any additional dollar cost for the company. The company is already paying them, so it may as well use them!

However, utilizing inside advisors means a company incurs another kind of cost: opportunity cost. Having an employee devote all or some of her time to selling the company or finding acquisitions means you’re taking that person away from the regular business of the company.

CFO or other financial bigwig

The CFO or other key finance person at a company is usually an integral part of the M&A process. For Seller, that person is responsible for assembling, preparing, and presenting the company’s financials and explaining, justifying, and examining any add backs (nonrecurring, one-time, or owner-related expenses).

For Buyer, she’s also the person who interacts with the bank, lines up the financing, makes sure money is wired or received, and runs financial models to make sure a given offering price makes economic sense for the company.

Corporate development people

Some companies (often those that do a lot of acquiring) have employees specifically tasked with engaging in M&A. These folks usually have the phrase corporate development in their titles, such as Director of Corporate Development, Corporate Development Manager, or even Vice President of Corporate Development. That’s a big one.

Whatever that person’s title, he or she is the liaison between the company and the target or the target’s outside advisors.