A Corporate Finance Adviser advises individuals and/or companies on corporate transactions – be it selling or buying a business, raising debt finance, raising venture capital finance, carrying out business valuations or due diligence investigations, preparation of business plans or financial models and strategic advice. Work usually centres on a specific event or ‘transaction’, and whilst it’s vital that Corporate Finance Advisers comprehensively understand financial accounting (they are often qualified accountants) our real skills lie in negotiation, deal management and transactional experience.
What should you look for?
Advisers that work exclusively in Corporate Finance
Lots of general accounting practitioners fancy that they can ‘dabble’ in corporate finance. Unfortunately, this can often result in poor, out of date or dangerous advice. The corporate market is rapidly changing in today’s economic climate, and your adviser should be able to guide you through this. They can only accurately do so if they are working on transactions on a daily basis.
Professionally qualified and appropriately experienced advisers
Be careful not to mistake brokers for advisers. Most Corporate Finance Advisers are professionally qualified, either in accounting, legal or specific corporate finance disciplines. Although sales skills are important, you do not want to be represented by someone who has a sales rather than a professional background – there’s more to a successful transaction than sales spin and bravado.
You need to trust your advisers in order to value their advice and recommendations. If when you first meet them they are promising to achieve values that sound too good to be true – then they probably are. If it’s not the best time to sell your business, if you need to get your house in order to increase marketability or, if your value aspirations are unrealistic they should say so.
A good adviser's fee structure should reflect their role in what you the client, are setting out to achieve. If appointed, corporate finance firms are usually remunerated by a success based fee payable when the deal is done. This protects you from paying significant up-front sums without guarantee of a positive result. The adviser is taking on risk, and is therefore unlikely to accept the engagement unless they are confident that they can achieve it.
Dedicated Corporate Finance advisers subscribe to a number of specialist databases which help to identify potential buyers, to research how previous transactions have been structured and to determine financial stability. This level of information is hugely useful when deciding if an offer is viable, particularly where payment in instalments forms part of the structure.
Nature of approach
How are your advisers going to contact potential purchasers? (Remember first impressions count!) Are they planning a mailshot, personalised mail or email, phone call or introduction by mutual contact? Will you be involved in the shortlisting process? It’s rarely an advantage to ‘tout’ the opportunity around, so be wary of organisations that suggest presenting the opportunity to hundreds of buyers. A carefully constructed shortlist allows for comprehensive follow up and feedback, and helps to protect confidentiality.
More so than ever before, good deals in the UK are coming from international buyers, attracted by an immediate foothold in the UK market, economic policy and spreading international risk. However, your adviser needs to be able to access international markets in order to take advantage of the global potential. At Critchleys, not only do we have international research databases, but we are also members of a global network (JHI) and make extensive use of online and social media in growing our international reach.
Some brokers down-tools once hands have been shaken on a deal (‘Heads of Agreement’), despite the fact that the transaction is barely half complete at that stage. A good Corporate Finance adviser will insist on project managing up until (and often after) legal completion of the transaction. By the end of the legal and due diligence process, there will be a surprising number of parties to coordinate, and good project management is vital for keeping to timetables and minimising complications.
Other specialist resource
A corporate transaction will entail many disciplines, advice on: Tax (personal and corporate), VAT, HR, accounting, company secretarial services and the ability to produce management information in a timely fashion all help to keep a transaction on track. These are all specialist services that we can offer in-house at Critchleys, ensuring that every aspect of a transaction is explored in order to maximise value and minimise risk.
It is likely that you will spend a fair amount of time with your adviser, sometimes in tense situations when negotiating. It’s therefore sensible to appoint someone that you believe you will ‘gel’ with, and whose opinion you respect and trust.
Success rates and references
Any adviser should be pleased to show you testimonials from recent clients, discuss recent transactions (without breaching confidentiality) and provide references on request. We take pride in our client service, and are always keen to demonstrate how we’ve achieved this in the past.
If you would are thinking of appointing Corporate Finance Advisers or would like to discuss the above please contact Justin Ray, Head of Corporate Finance, at email@example.com or on 01865 261100.