What is a business transaction advisor? When may you need them to assist you?

Clients are often curious regarding the role of a transaction advisor and how transaction advisors may assist them This article endeavours to explain these matters.

What is a transaction advisor?

A transaction advisor is normally qualified as an accountant, financial advisor or has specialist expertise and experience in negotiating business sales and acquisitions, managing due diligence and related matters.

A transaction advisor should have the skills and knowledge to take the lead with preparation for the sale or purchase of a business, offering a business to a buyer for sale, speaking to companies in the process of selling, negotiating commercial terms for the sale or purchase of a business, project managing and advising on due diligence and liaising with lawyers to complete a transaction. 

However, a transaction advisor often differs from a broker or M&A advisor in that they will often act for you as a consultant to negotiate with a buyer or seller who has either approached the business or already been approached by the business and to lead the sale or purchase. In this manner, a transaction advisor typically charges clients professional fees (such as how an accountant or lawyer charges) for their expertise instead of a commission or success fee.

When may you need a business transaction advisor?

In our experience, clients gain benefit from engaging a business transaction advisor in circumstances such as when:

  1. They may have been approached by a competitor of theirs who expresses an interest in acquiring their business. In such circumstances, a transaction advisor can ensure confidentiality is best managed whilst managing the technicalities and commercials of the transaction for you.
  2. They may be considering selling their business (either in part or full) to employee(s). In such circumstances, confidentiality is key, however it is vital that the transaction advisor is skilled in communicating complex matters associated with the transaction to those employees in simple terms and further, prudent for the transaction advisor to manage any expectations of the employee(s) to ensure that if a transaction fails the employee(s) can be retained.
  3. They may have identified one buyer who they wish to offer their business for sale too. In such circumstances, they wish for an intermediary to directly approach that one party to seek out that party’s interest on a confidential basis. Thereafter, if the party is interested, they may require the transaction advisor’s expertise in negotiating an optimum business sale.
  4. They may have identified some businesses which they wish to acquire and require assistance with approaching those businesses confidentially to seek out their interest in selling and thereafter negotiating an optimal acquisition.
  5. They may be undertaking a business sale or purchase and feel comfortable with negotiating (or conducting any other matter of the transaction themselves), and require ad-hoc assistance with a specific area such as commercial due diligence.

In each case, we find clients gain significant value from engaging a transaction advisor as they can simply ask the advisor to help them within a set scope as opposed to running a market-wide, success fee-oriented sale or acquisition campaign.

Find Out More

Groves & Partners are expert business transaction advisors with significant experience in providing specialist transaction advice to clients who are buying and selling businesses. If you believe you may require transaction advice and would like to know more about how we can work with you, contact us on 1300 892 717 (+61 2 7208 7970) or email info@groves.com.au.

Written by Stephen Groves