The financial needs of a business vary depending on its type and size. How do they know when to hire an external transaction advisor? Should they wait until they need to raise capital or make major investments? Is an external advisor even necessary or do they have sufficient in-house capacity to go it alone?
For most companies, the decision is guided by the advisory fees. However, external advisors bring experience and expertise, which may very well justify the cost. The advisors not only maximize value for such firms but also minimize the impact of the transaction, allowing the business to continue with its day-to-day activities. On top of this, transaction advisors offer critical information and guidance to enhance the deal process and performance.
When searching for transaction advisory services, here are some important considerations:
1. Seek Recommendations
A reasonable starting point is to find recommendations from major market operators and regulators such as the Nairobi Securities Exchange (NSE) and the Capital Markets Authority (CMA). These organizations will invariably extend free and objective advice on how to execute a planned project.
2. Requests for Proposal (RFPs)
Companies issue RFPs when they select advisors. RFPs help the company gather information from multiple consultants. They give the business a range of perspectives and let it pick an advisor most likely to help the planned transaction succeed.
3. Go for Good Credentials
One of the best ways of identifying a reputable transaction advisor is by examining its licensing/regulation status. Regulated firms have undergone vetting at the point of licensing and continue to be supervised by the regulator.
4. Look for Experience
Check out the record of the advisors. Conduct an online search of the financial consultant and verify their status, history, years of experience and transactions completed. Transaction advisors with a deep understanding of a sector can add tremendous value in certain cases, such as the sale of a company to a strategic investor.
5. Create a Transaction Budget
Transaction advisors require compensation for their specialized knowledge, advice and service. Having a certain amount set aside to pay them.
6. Introductory Meeting
Beyond the above consideration, it is also helpful to set up an introductory call or meeting with the advisors before engaging them. This provides an understanding of how they conduct business and lets the firm decide whether that approach is agreeable.
Choosing a transaction advisor is as important as all other aspects. By identifying a licensed and reputable advisor, you will be more assured that your financial decisions are well informed.
Standard Investment Bank (SIB) is licensed and regulated to provide a wide range of services within corporate finance and has built a reputation of efficiency, effectiveness and cost competitiveness spanning over many years.
For public and private companies looking for transaction advisory services, email us on email@example.com.
Jacktone Odoyo. the author, is a Corporate Finance Associate at Standard Investment Bank.