Benefits of Exclusivity - O'Keeffe and O'Malley

Benefits of Exclusivity

Jul 17, 2020

After you’ve researched, interviewed and selected a competent, professional intermediary, you may wonder whether you should enter into an exclusive agreement with that advisor. While it may seem intuitive that the more people out in the market selling your business the more leads you’ll get, consider the many reasons it’s to your advantage to work with just one M&A specialist.

  • Confidentiality – We understand the importance of keeping the sale of your business confidential, and that the loss of that confidentiality can have serious negative effects concerning employees, customers, suppliers and competitors, and therefore, profitability. Working with one M&A professional can ensure a disciplined process that withholds your identity until signed NDAs are in place.
  • Focus – Working with one dedicated M&A advisor ensures you are being presented with the best buyers for your business. In a non-exclusive relationship, a representative may be motivated to push his or her buyers to get the sale. The focus should be on the buyer that is right for you, not on who gets paid when the sale closes.
  • Qualified Buyers – Establishing a relationship with one intermediary ensure that the person will be highly motivated to conduct a comprehensive search for potential buyers. And even more important, your advisor will screen prospects so you don’t waste your time talking with buyers who either don’t have the funds or who simply are not a good fit.
  • Better Price/Terms – The key to getting the best possible price is to get more than one buyer interested so they bid against each other and drive the price up. When buyers know they are competing for a business, they are more likely to make their best offer and pay more of the price at closing versus a larger earn-out or seller note. This negotiating process works best when one person is managing the process with your best interests in mind.
  • Avoid Confusion – A non-exclusive agreement could result in the same buyer receiving information from multiple sources. This is not only confusing, it can give the impression that you’re overly anxious and will take a lower price. It can also appear that confidentiality is not important to you.
  • Time is Money – Selling your business will consume some of your time, no matter what route you take. And coordinating efforts between multiple advisors can be a full-time job. Working with one M&A professional will reduce the time you spend on details so you can continue to run the business and drive revenue.

A frequent objection to entering an exclusive arrangement is the potential for a walk-in buyer. But this buyer is no different from any other and must be qualified, presented with profiles, details about the business and its financials, encouraged to make an appropriate offer and be guided through due diligence and the closing process. Your M&A advisor will see that you get the best price, regardless of where the buyer comes from.

Most business owners sell only one or two businesses in their lifetime. But the typical buyer becomes savvy quickly after looking at a vast number of businesses before they close a deal. They learn what questions to ask and how to negotiate for themselves. Your exclusive M&A advisor will anticipate those questions and be your advocate. Allow them to know you and fully understand your business so they can do the best possible job at finding the right buyer for you.