The process of selling a tech business is typically so complex and time consuming that it can be considered a full-time job in itself. This is why having the right M&A advisory firm by your side can make such a decisive difference. As well as taking on the responsibility of managing the transaction, so you can carry on running your business and meeting your targets, they will have the experience and contacts to create a competitive market around your company, enabling an optimal outcome.

Given that your M&A advisor can directly impact your company’s valuation, the terms of the deal and pace of the transaction (and whether it even happens at all), it’s critical to select a firm which is the right “fit” for you and your business. 

Here’s a list of the most important questions to ask when making your decision, including some insights from Jonathan Simnett, managing director at Hampleton Partners.

Your M&A advisor should have deep experience of your specific tech subsector, meaning an up-to-date knowledge of its core technologies, its specialised argot and acronyms, its market dynamics, and its valuation drivers. If they don’t have a proven track record of completing relevant transactions, they may struggle to orchestrate the best possible deal or handle problems as they arise.  

Jonathan Simnett recalls one transaction which would have fallen apart without expert guidance: 

“Hampleton was engaged in the complex sale of a highly specialised IP-rich part of a group with operating companies in three European countries. A strong US buyer had been identified by Hampleton and due diligence was underway, but internal agendas and resulting tensions suddenly caused relationships to collapse, cooperation to be withdrawn and the deal process halted. 

“Hampleton was asked to work on behalf of the entire group and moderate a special session whereby outstanding issues were resolved and the transaction process could get back on track. A sale to a preferred bidder was achieved for Hampleton’s client, with the remaining and restructured company going on to be successfully acquired by private equity a few years later.

“Hampleton was able to save the process and bring about a lucrative outcome because of its managing directors’ decades of experience in founding, building and exiting businesses in that tech sector.”

As well as having strong experience within your subsector, the right M&A firm will also have a solid track record of managing transactions of the relevant size. For example, a bulge bracket bank which specialises in giant, blockbuster deals involving major multinationals won’t be the right fit for a smaller-scale exit. As a rough estimate, deals of up to around $50 million are best handled by a boutique advisory firm rather than an investment bank.

With dealmaking, as with so much else in business, who you know can be as critical as what you know. One of the biggest benefits of engaging an M&A firm is it will give you access to their contact book of potential buyers, with the best firms having well-established relationships with both strategic acquirers and private equity players. 

You’ll want to enquire about the scale of an advisor’s network, to ascertain whether the firm has connections with buyers within the verticals and geographical locations you’re interested in. Remember that a suitably expansive network will allow your advisory firm to actively cultivate a competitive bidding situation, potentially enabling a more rapid and lucrative sale, so this is a significant consideration to keep in mind.

The transaction process can last several months, during which time the staff at the M&A firm will effectively become your colleagues. Given that you’ll be collaborating on some of the most important decisions of your career, often under high pressure, you’ll want to know exactly who your contacts will be. 

Is the right professional chemistry there? Can you trust them to handle the nitty-gritty of the transaction while you get on with running your business? And will senior partners be directly overseeing every stage of the process?

Jonathan Simnett recalls how establishing rapport and trust earnt Hampleton a major client:

“Some time ago we pitched for a great company. We’d been talking to them for years and had previously advised them not to sell at an earlier stage of their development. The time was now right, and we had a clear understanding of how they were going to appeal to a selection of buyers.

“The pitch meeting went well and were looking forward to a positive result.  But a few days later we got the call. They really liked us and knew we could do the job, but to please their shareholders they felt they should go with a ‘bigger brand’. We were of course disappointed but wished the company every success in the process and assured them that we’d still be delighted to talk again ‘should things not work out’. 

“Three months later came another call. It was one of the company’s co-founders asking ‘if we were busy’. It turned out the resources weren’t delivered – a very junior team had been put on the account and the much-promised senior directors and their expertise never materialised. The client had bravely decided to cut their losses, and we were beside ourselves to step in. We put the advisory team we had pitched on the business and a few months later we had successfully sold the European company to an American buyer.   

“The lessons from this? Seek guarantees on who will be working on your transaction.  Be sure you can imagine working with them through thick and thin and that they will give their all to get you the right exit.”

If you’d like to discuss your business and exit goal with Jonathan directly, please drop him an email. 

You can also download our free M&A market reports for the latest insights into valuation and acquisition trends across key tech sectors including AI, Digital Commerce and Enterprise Software. These explain what acquirers and investors are looking for, laying out the most consequential market data and landmark deals in each sector. You can also subscribe to ensure you’re notified whenever our newest reports are published.