Businesses continuously navigate through multiple transactions in order to grow and flourish. From raising much-needed capital to forming strategic alliances, the goal is the same: to achieve success and obtain the maximum value for your company and your shareholders.
Of course, each corporate transaction, whether domestic or international, comes with its own set of opportunities and risks and must be approached with utmost care. The stakes are high, and you need to make the right decisions at the right time to effectively close the deal in your favor.
Fortunately, there are experts who can provide exactly the kind of support you need to make these crucial business decisions.
What Are Transaction Advisory Services?
A transaction advisory services firm can help companies evaluate and navigate all kinds of corporate transactions to achieve the best possible results. For both investors and target companies, having a qualified team of advisors can be just the ticket in ensuring that all transactions are strategically managed, and all areas are thoroughly evaluated to identify and minimize risks.
Advisory services offer businesses the necessary advice and support at every stage of the transactional cycle. Thanks to the advisors’ technical skills and in-depth industry experience and expertise, you can be confident that you have a clear perspective of the transaction and are fully prepared and in the best position to clinch the desired results.
6 Corporate Transactions That Seasoned Advisors Can Help Your Business With
Make sure to call in a trusted advisory firm when making these six critical business transactions:
1. Raising Capital for Your Business
Companies raise capital for a variety of reasons. Having sufficient capital or external funding means that your business can scale more quickly, expand to new markets or locations, invest in necessary research and development, gain greater credibility, and build connections that can lead you to extensive business resources that you may not be able to access otherwise.
It can be a daunting process, but transaction advisory service providers know the best and most innovative methods to drum up the capital that your business needs.
They can:
- Help restructure your financial assets and liabilities.
- Formulate and vet offering materials.
- Support you throughout negotiations to secure commitments on the most favorable terms.
- Oversee all phases of the process through to its successful closure.
2. Mergers and Acquisitions (M&A)
Buying or selling a business is a major undertaking that could potentially usher in significant growth. Because there are several moving parts to this deal, every angle must be closely examined in order to devise a creative M&A strategy, identify all possible risks, and arrive at the correct decisions.
Consultants can skillfully represent either side of the M&A transaction by performing these essential services:
Buy-side
- Researching and identifying the target acquisition companies.
- Assisting in valuing the acquisition candidates.
- Assisting in structuring the acquisition transaction.
- Negotiating the initial acquisition offer as well as the final purchase agreement.
- Providing advice throughout the M&A cycle until the deal is closed.
Sell-side
- Conducting valuation analysis of the business.
- Developing an Investment Teaser.
- Preparing a Confidential Information Memorandum.
- Identifying prospective buyers.
- Assisting in structuring the transaction.
- Negotiating the initial letter of intent as well as the final purchase agreement.
3. Financial Due Diligence
Simply put, financial due diligence is the investigation and analysis of a company’s financial performance. Having this information enables a business to gain a better understanding of their current financial situation as well as a clearer picture of their future prospects.
Financial due diligence offers a deeper dive into a company’s financials than mere financial statements and records. This is especially important to have during a business merger or takeover because it helps in thoroughly reviewing a target company’s offering and identifying potential red flags that could compromise the deal.
Transaction advisory specialists can help by:
- Providing a comprehensive assessment of the financial statement of accounts.
- Identify potential earning capabilities in the future.
- Point out undisclosed risks.
- Gather and study independent opinions from industry experts.
- Enable companies to plan the merger and acquisition while financial due diligence is handled.
4. Business Valuation
Business valuation refers to the process of determining a company’s or business unit’s economic value. This can entail analyzing all aspects of the business, such as its capital structure, management, the market value of its assets, and prospective earning capabilities.
A business owner may turn to professional evaluators to provide an objective estimate of their company’s value for a number of reasons:
- Strategic planning
- Selling a share in the business
- Selling the business
- Buying a business
- Funding
- Litigation
- Exit strategy planning
- Tax reporting
Your hired transaction advisory expert can perform the following:
- Business valuation through specialized analytics. (Methods that can be used: market capitalization, earnings multiplier, liquidation value, book value, times revenue method, discounted cash flow method.)
- In-depth financial modeling and forecasting analysis.
- Sufficient mirroring of financial projections.
- Advisory that enables companies to reach reliable estimates of their fair market value.
5. Business Plan and Investor Pitch Deck Formulation
Entrepreneurs and business owners building and growing a company must know whether they need a business plan or a pitch deck, or both, to secure the buy-in of the intended stakeholder. But what’s the difference between the two?
- A business plan has been the traditional tool of startup founders for decades. It is a typically lengthy document that can run from 10 to 100 pages, detailing the company’s plans for the next 3 or 5 years. It provides a look into the business’s corporate structure, sales and marketing plans, operational style, financial projections, growth and success assumptions, and the overall long-term game plan.
- On the other hand, a pitch deck is a PowerPoint or Google Slides presentation consisting of about 10 to 20 slides. It is usually a very simple, short and highly visual version of the traditional business plan. The pitch deck emerged specifically for the purpose of making a quick startup pitch to potential investors for raising funds.
Each type has its advantages. A business plan pushes startup owners to think through every detail and create a tangible and comprehensive guide to the business and ensure that they are fully prepared and credible in front of potential partners and investors. Meanwhile, a pitch deck or mini business plan is a lot quicker to put together, is easier to update and share with potential partners and investors, and is essential (and expected) when raising capital.
Transaction advisory service providers can help you determine whether a business plan or a pitch deck or both, is most suitable for your business type or intended fundraising efforts. Through these documents or presentations, will help describe your business model, layout your funding requirements, discuss your best exit strategy, and more.
6. Business Exit Planning
An exit plan is a business owner’s strategy for selling their ownership of the company to other entities or investors. The goal is to complete this process in a way that would provide the business owner with maximum enterprise value or to make a substantial profit when liquidating their stake in the business. If the company is struggling, a business exit strategy would enable the owner to limit their losses.
Common exit options include management buyouts, strategic acquisitions, and initial public offerings or IPOs. A transaction advisory team can determine the best strategy to use, and help with improving operations to enhance the business’s value and make it ready for sale.
Make Sound Business Moves With the Right Advice
Transaction advisory services help guide companies when making crucial business decisions that could impact their future growth. Hire a trusted advisory firm with expertise in transaction advisory, feasibility study and independent ERP advisory services, and more to ensure the best results for your business.
AUTHOR BIO: Ratheesh C. Ravindranathan is Managing Partner at Affility, a comprehensive advisory services firm assisting clients in the UAE and worldwide with IT, risk, and management consulting solutions. A specialist FinTech professional with over 15 years of industry experience, Ratheesh holds an MBA and was involved in many M&A transactions and strategic planning engagements during his tenure in the UAE.
