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The Three People You Can't Sell Without

When you're assembling the team to help you sell your business, there are three people I consider non-negotiable.

If your transaction is above two or three million dollars in total enterprise value, I'd suggest having all three of them to run a great process.

#1: An experienced and efficient M&A attorney

This doesn't mean you need to go to the biggest brand or the biggest law firm. For most transactions, you don't need to overspend. You need a team that's experienced and knows the fights to fight and the fights not to fight.

This matters because attorneys get paid whether the transaction gets done or not. And as we hear all the time, time kills deals.

Your family attorney or in-house counsel can work, but only if they've done multiple M&A transactions. Not one or two, but 10 or 20 or 30. For most businesses under $50 million in enterprise value, that attorney isn't on staff. And if your in-house counsel is distracted 30 hours a week on a deal, now you're putting the business at risk, not just the transaction.

If you need a point guard for the NBA championship run, you probably want someone who's actually played point guard before.

#2: The dealmaker

This is your business broker, M&A advisor, or investment banker. The title typically comes down to deal size:

Whatever the title, their job is to organize your data room, find that core group of 20 to 50 real, interested acquirers, and drive toward an LOI.

And a signed LOI isn't the finish line. You're maybe 10% of the way there. In the two to five months of diligence that follow, many buyers will try to retrade, or reduce the price. Your dealmaker's job is to hold the line.

#3: A high-quality wealth advisor who knows tax

A lot of founders tell me, "Nope, I've got my finance guy. We were fraternity brothers back in the day."

That's great. But for a transaction that's going to generate seven or eight figures in cash, you need someone with deep experience. Not someone who did it once on a $500,000 deal and figures they can handle a $25 million one.

This planning often happens months, quarters, or even years before a transaction. One of my favorite early conversations with founders is: what do you want to do after this? Buy a winery? Build your next business? Buy 10 apartment buildings?

A good wealth advisor will tell you how to get there efficiently. Or they'll tell you that, after tax, you can buy half of one. That conversation can even change whether you should go into a process at all.

Sometimes your wealth and tax advisor are the same person. Sometimes they're two. The point is to have both covered.

Stephanie and I break down each of these three roles in our new series, Wise Up on M&A, with a dedicated episode for every one. And as deals get bigger, there are two more people worth adding to your team.

Make sure to follow Wise Up on M&A on Youtube, Apple Podcasts, and Spotify!

1️⃣ Is my transaction likely to land above $2–3 million in enterprise value, and do I have all three of these people lined up?

2️⃣ Has my current attorney actually run 10, 20, or 30 M&A deals, or am I assuming their general expertise will carry over?

3️⃣ Do I know whether my deal size calls for a business broker, an M&A advisor, or an investment banker?

4️⃣ Does my finance person have real experience managing a seven- or eight-figure liquidity event?

5️⃣ Have I gotten honest about what I actually want to do after the sale, and whether this deal can pay for it?

☑️ Check your attorney's resume: Ask them directly how many M&A transactions they've led. If the answer is one or two, start looking for a specialized, efficient M&A attorney now.

☑️ Size your dealmaker to your deal: Get a realistic sense of your enterprise value range, then use it to figure out whether a broker, advisor, or banker is the right fit.

☑️ Write down your post-exit goals: Get specific about what you want life to look like after the transaction, and bring that list to a wealth advisor who understands tax.

That's all for this week.

Remember that selling your business may be the biggest transaction and financial windfall you'll ever go through. Don't blindly trust. Talk to more people than you probably feel like you need to, and build your team with people you can trust to be there with you in the tough times.

If you want help thinking through who belongs on your M&A team, reply to this email. We're always happy to walk you through your options.

Talk next week,

Brian Dukes

Managing Partner at Exitwise