What is the role of a Corporate Financier in a business purchase?

What is the role of a Corporate Financier in a business purchase?

Once you’ve got a target business in your sights, the next step is to undertake a valuation of the business in order to progress matters with the sellers and their advisers. This is where a corporate financier (or M&A specialist as they are often called) will come into their own.

A corporate financier is like a Project Manager and will work with you to orchestrate the deal and the process. They will help you to understand the different stages of the purchase process and they will be able to support you to produce the necessary documents and walk you through the complexities of the formal offer stage. If your offer is accepted, thereafter the corporate financier will be able to work with you to effect the remainder of the process, which will typically include the following:

• Business valuation from the base information including the Information Memorandum;  statutory accounts; management accounts; additional info supplied by the sell side
• Suggest options for the structure of the deal, including the quantum of the completion payment/deferred consideration/ earn out provisions/ role and salary or consultancy fee if appropriate for the vendors post sale/ working capital and free cash calculations
• Produce a Heads of Terms document (HoTs) – this will include an exclusivity period to enable you, the buyer, to have sufficient time to undertake the due diligence exercise and also to select an appropriate provider to fund the transaction
• Funding search and identification of one or more relevant funders, subject to what is required – debt, asset based lending or an equity solution
• Preparation of the information required by funders including the media pack. The media pack is effectively a sales document outlining the opportunity and all relevant information including financials, SWOT analysis, the buyer’s CV/background, future projections, etc
• Identification and introduction of additional experts in due diligence, corporate law, accountancy, corporate and personal taxation, financial services, etc
• Introduction of additional team members/investors in specific functional areas or even a Chairperson or a Non Executive who can bring valuable insight through years of experience
• Liaison with all parties involved
• Control and ongoing driving of the process towards a successful purchase completion

How do corporate financiers charge for their services ?

This can work in a number of ways including:

• Fixed fee basis
• Hourly / day rate
• Percentage of the deal value
• Fee swap for an equity stake in the acquired business
• Some mix of some or all of the above

Valius can introduce you to a number of relevant parties who can support you with corporate finance services and specifically, have an agreement with a corporate finance boutique who act exclusively for business buyers. This boutique provider have offered to give any buyer a free half hour consultation once a target has been identified and the buyer wishes to progress to valuation/offer stage to discuss strategy, next steps, etc.