According to financial-tech banker Paul Inouye, selling a business can be an emotional and complex journey for company founders and other entrepreneurs to navigate. Inouye says that when it comes to selling, these persons should seek an experienced, capable financial advisor or investment banker who can guide them.
“Process matters, and you want to put your best foot forward in any sale transaction. This holds a lot of pressure because you want to get the best offer for your hard work. The process can be a long and complex one, and if you haven’t undertaken a successful sale previously, it’s easy to [fly] over your skis very quickly. If you’re planning to sell your company, a seasoned financial advisor can give you sound strategic advice and insights throughout the entire process.” Paul Inouye explains.
What a Financial Advisor or Banker Can Do
As Inouye — who founded boutique fin-tech bank Western Hills Partners — tells it, there are several reasons for bringing a banker or financial advisor aboard. A banker or seasoned financial advisor can assess a business’s true strategic value, structure a deal’s core terms, develop fiscal models for the future of the business, offer contacts for and access to possible buyers, provide key industry insights and assist in positioning the business properly and developing marketing presentations or other materials for a potential sale.
A Banker or Advisor Can Fill in Gaps
Inouye says the above advice is valid even if potential buyers have already been located. “An investment banker can help in whatever areas you aren’t experienced in handling,” Paul Inouye insists.
“Some bankers might be great at networking to find a buyer but [may] struggle with negotiations or understanding core value. Or, [they] may not be as familiar with what a realistic price or what market M&A terms look like.”
Trust Is Key
Inouye thinks entrepreneurs should go out of their way to select a banker or advisor who’s earned their trust. “You’re going to depend on this investment banker to take you through [a] complex process,” notes Inouye.
“Choose a banker who has experience in your industry to help you get the highest possible price and best possible terms. A great banker will also help you avoid the common risks that come with selling a business. You need to have an expert who’s knowledgeable about core business and financial due diligence requirements.”
Look at Sizes of Past Deals
Paul Inouye says entrepreneurs should examine the sizes of any deals such a banker or advisor (or their firm) has done in the past before selecting them. “You want to pick a firm that frequently handles deals your size,” he says.
“Choosing a firm used to large deals where your deal is the smallest might mean being pushed to the bottom of [a] priority list. If you choose a company used to smaller deals than the one you’re working on, they might not be prepared to handle what you are after. A great firm will have the right team to handle your company, putting you inattentive and capable hands.”
Inouye is in a great position to offer the above advice because he has a wealth of experience in investment banking in Silicon Valley. Over the course of the last three decades, Paul Inouye has worked at financial and investment firms Moelis & Company, Perella Weinberg Partners, Lehman Brothers’ Internet Banking Group, Morgan Stanley, Piper Jaffray, and Robertson Stephens. Inouye graduated from the University of California, Berkeley, before getting his master’s degree at The Wharton School of Business at the University of Pennsylvania. The father of two children, he presently resides in Portola Valley, California.