Do we need an advisor for our deal? Advisors can be so expensive, right? They have success fee and do not work on hourly based models. They don't understand our business, do they? Will they give up at the first sign of trouble? These are all good questions that entrepreneurs, owners and board members ponder when considering a business transaction.

So, what is an M&A advisor, or "advisor" in Finnish? There is no specific professional title or degree for this role. In theory, anyone can give advice. Advisors are often investment banks, lawyers, accounting firms, management consultants, etc. Since this is the most important deal of your life, it is crucial to choose your advisor carefully. The cheapest one or the one that claims your company is the most valuable in the world may not be the best choice. Large international investment bank might not be the right fit for small deals, and a local firm might not be appropriate for billion-dollar international deal.

There are three critical criteria for choosing an advisor to be remembered:

• Expertise: The advisor’s experience within the sector, understanding of the business and technology. Communication and negotiation skills, which are especially important in cross-border deals. Creativity in difficult situations and a hunger for making deals.
• Commitment: One hundred percent assurance of the advisor's dedication to your project.
• People: The reliability, personal chemistry, and honesty of the team members.

So, what does the advisor team do to earn their bread? The advisor’s job is to enhance storytelling, clarify business plan, prepare sales or investment documentation, search for and contact potential buyers or investors, do hard selling and stone lifting work, analyse and compare different offers and proposals, find the way to improve proposed value and terms, assist in the due diligence process and coordinate the different work streams trough out the whole process. Along the way, things often happen unexpectedly, which is why the transaction process is often an adventure.

Why is it sometimes difficult for a technology company to find an advisor? The smaller the company, the smaller the likely sale price. For this reason, larger advisors cannot afford to take on the project or may assign a junior team member to learn the ropes. In larger deals, relying solely on a foreign advisor can be intimidating. The remedy for this is the help of a local player. Using two advisors has proven to be quite effective. A domestic advisor, close to the owners, keeps the buyer and international advisor in check and honest. You can almost get the team of two advisors for the price of one, so cost is not a significant issue.

Research shows that the role and importance of M&A advisors in successful business transactions are significant. In addition to research, this is evidenced by the satisfied beneficiaries of successful deals.

By Vesa Walldén