Top Merger and Acquisition Intermediaries perform four very valuable functions when representing an owner selling his or her .company. First, they develop a defensible valuation based on EBITDA, Add-backs and Multiples. Second, the intermediary confidentially markets the business to a wide spectrum of potential acquirers. Third, they create competition to insure the owner receives the best possible price for their business. And finally, the intermediary negotiates a deal structure so the owner can keep the largest percentage of the hard fought proceeds after taxes. 

In my experience, Creating Competition is the most important step of the process and is often over looked by deal makers. This step adds the most value to the owner-intermediary relationship. A company owner simply can't create competition as credibly as a third party intermediary.  

Creating competition, or at least the impression a company is a sought after should be a component of every deal, and the intermediary is in the best position to do it honestly and ethically. Let me share personal anecdote to drive this point home. In my college days I was somewhat less than adept at meeting women to date. By the time I got over insecurity and was ready to ask a girl out, the opportunity had passed. I had developed a very close friendship with a very attractive woman (who I call Dawn), unfortunately my romantic interest in Dawn was not reciprocated. Dawn and I became extremely close friends, we took classes together, we ate lunch together, we played racket ball, we went to parties together and danced (you get the picture.) I noticed over time that people were treating me differently because of the assumptions they would make based on the appearance of my relationship with Dawn. Men were envious of their perception of my relationship with Dawn, and more importantly women, who had not really paid attention to me, suddenly began to want to meet me (hopefully this story begins to make sense.)  At no point did I think it was appropriate to discuss the precise nature of my relationship with Dawn with any third person. 

A small percentage of companies have the magic EBIT number, the right annual revenues, are in a sought after industry, and have two years of solid growth that make them attractive to any acquirer and create competition automatically. The vast majority of companies don't fit exactly into a potential acquirer’s ideal matrices and have a few warts on them; so acquirers are unlikely to fight over the opportunity bid up the price. The vast majority of companies need to be seen with "Dawn" to attract the right acquirer and bring the best offer; and it is up to a good intermediary to develop this perception for the company. This can be done entirely honestly and ethically over time. Confidentiality and ethics precludes an intermediary from giving any details concerning a potential acquirer to another potential acquirer, but an intermediary is not bound to deny the existence of the other acquirer. An owner simply would be viewed as disingenuous doing the exact same thing. The majority of deals I have been involved with would not have gotten the best price without competition. Many times when the acquirer was on the fence, they would not have issued a timely Letter of Intent unless they sensed competition for the deal.  

In modern M&A market place there are always at least two or three potential acquirers for every deal, a good intermediary knows how to find them and develop an atmosphere of competition to insure their client gets the best possible price and deal structure for their company.