Owners of successful businesses are often approached by third parties interested in buying their firms. Since the downstream energy market is an oasis of opportunity in the middle of a general economic malaise, potential buyers are coming out of the woodwork.
Sometimes when I solicit representation of a firm, I hear, “We like the idea of you representing us, but we are already talking to someone interested in buying our company. We’d like to see if this goes anywhere; maybe you should touch base in another month or so.”
If you are entertaining a prospective buyer without representation by an investment bank, I strongly urge you to consider this may not be the best course of action for the following reasons:
- One offer is sometimes worse than no offers. IVS Investment Banking creates and establishes the real market. By engaging with a single bidder, you really don’t know what market value is. Assume the bidder offers $10 million initially and you enter exclusive negotiations. Even if you negotiate a final deal worth $12 million, your “win” of 20 percent may leave a lot of money on the table if there were two other firms willing to offer you $13.5 million as an initial bid.
Our process will find you several bidders by working with a larger set of private equity groups and a broad slate of potential strategic buyers with whom BIC Alliance and IVS Investment Banking have existing working relationships. Our process will narrow the larger set of reviewing parties to a smaller set of qualified interested bidders, who will establish the bona fide market value of your firm.
- We can save you the headache of dealing with tire kickers and save you time dealing with potential buyers. We know how time consuming it is to pull this data together, compile it and interpret it. Many meetings and phone calls will interrupt your day-to-day profit-driven activity. By allowing IVS to engage in this process, you only have to do it once with an adviser/ agent instead of a negotiation adversary. If this initial bidder falls through, the time you spent with him is wasted, and you will basically begin anew with the next opportunistic bidder. Let us compile the data and put together the “book” on your business.
Let us answer and screen most of the questions on your behalf, and you will be free to continue to do what you do best: generate the profit that makes you attractive.
- We can enhance your negotiating position with any potential buyer. If you engage us as your agent, a prospective bidder will work on the assumption we are having a dialogue with other bidders as well. This helps prevent lowball bidding.
Furthermore, when you say something during negotiation, you have to live by it simply because you have the authority to speak for yourself. When we are in dialogue on your behalf, we can test ideas and the strength of the bidder’s position much more easily. IVS Investment Banking has been through this rodeo many times before, and that experience alone can result in great counsel to you.
In short, we have a very low-risk engagement proposition that ensures you don’t leave large amounts of money on the table, saving you time and enhancing your negotiation strength. If the ultimate best bidder happens to be the one you are working with now, wonderful! Odds are that won’t be the case, but if it is, you will know you maximized your return.