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Everything you need to know about lead advisory!

Published on June 18, 2022

Every business needs advice on financial matters as building and managing a corporation is difficult. There are ‘n’ number of tasks that need to be done rightly; for instance, companies look for investors to expand their business or increase their work profile. It can be a long, complex, and exhausting process. There are companies that have financial advisors, and there are some which can not afford to have experienced advisors in their team. Under such circumstances, businesses look forth to opt for transaction advisory services without having to shell out a lump sum amount for an executive-level post.

The following blog intends to impart knowledge on
lead advisory service that falls under the umbrella of transaction advisory.

Lead Advisory

The survival of any business requires the continuation of capital growth, making it a prerequisite for any successful business. And in the given global economic slowdown and constrained access to financing, the chances for business growth and opportunities are all more limited. In this environment, expert advice is more crucial than ever. This is where lead advisory, which falls under the transaction advisory service domain, breaks into the landscape to keep the wheel of success moving!

A lead advisory company operates a portfolio that includes solutions and services that help businesses with growth and capital building and acquisitions, investments, internal restructuring, and more. In the absence of the proper support and information, entrepreneurs can not reach an optimum decision to expand their business and upscale their success. This can overwhelm entrepreneurs, which is why they seek service providers who can work around corporate finance M&A, portfolio advisory groups, and credit card-related transactions.

M&A Lead Advisory

Mergers and acquisitions significantly impact the partnering companies while initiating complex and ‘long hour’ compliances to fulfill and financial transactions to look after. The M&A Lead Advisory providers function as financial advisors who are adept in the sell-side, buy-side, and merger situations. They harness their industry experience to address issues—as they arrive. Typically, these industry professionals start work with building transaction strategies to the point of deal closure.

Today, leading service provider companies have ‘transaction manager’ profiles to look after M&A processes and transactions. They are typically designated to look after the following responsibilities.

1. Coordinate with tax and legal consultants involved in the process.
2. Plan and create documentation while building the financial model.
3. Run a search for potential buyers or sellers.
4. Offer help in developing SPAs or ‘sale and purchase agreements.’
5. Structure the deals between partners and conduct negotiations.

Sell-side advisory services

Investment banks offer sell-side advisory services to businesses in the sale process. The process involves:

  • Crafting marketing documents.
  • Valuating the company.
  • Searching for potential buyers.
  • Negotiating with them till the point of transaction closure.

A point to consider here would be to remain cautious while selecting a sell-side advisory team as few providers might want to make quick money by presenting an ill-fit buyer party present in the line. Basically, a sell-side engagement involves the following operations:

  • Analysis: It involves running a comprehensive analysis of the seller’s requirements and
    objectives to build an effective buyer list.
  • Drafting compelling teaser: To manage the initial interest stage by circulating it to a number of potential buyers.
  • Build Confidential Information Memorandum or CIM: Draft the CIM that highlights the business opportunities.
  • Valuation: Run initial valuation of the company to compare against the target company.
  • Evaluation: It includes examining the drafted proposals, letter of intent, and any other related documentation.
  • Deal Closure: Coordinate with other departments like legal and tax, related to the process, to seamlessly finish the transaction.

Buy-side advisory services

A business can hire an investment band or M&A advisor to spot an acquisition target. Buy-side advisory services allow companies to find a suitable partner whose financial structures and transaction rationale aligns with the buyer. Basically, a buy-side engagement involves the following operations:

  • Identifying target: It includes finding potential partners that meet buyers’ criteria. Industry knowledge and relevant connections might help the service provider to find the targeted companies.
  • Assessing target: It includes an assessment of the targeted company’s financial conduct and its management team.
  • Valuation: This step includes determining a value range based on the running industry rates and comparable variables.
  • Structuring: Finding an intersection point between buyer’s capital expectation and target’s capital investment.
  • Drafting a letter to intent: Create a letter of intent on the buyer party’s behalf suggesting the decided enterprise value and a thorough breakdown of the proposed capital structure.
  • Closure: Coordinate with other departments like lawyers, tax, and accountants to make sure the acquisition is completed successfully.

Leading companies across the globe like Felix Advisory, PwC, KPMG, Deloitte, and more—with their industry-standard advisory and consulting services—have left their mark in the industry. Following their footsteps, Felix Advisory is emerging as a steady player in the market. This brand has established a robust presence in the management consulting domain in India. It offers a broad range of transactional advisory services to aid businesses in developing financial modeling and strategy, imparting unbiased advice, assessing alternative financial solutions to conducting a valuation.

To avoid falling into the web of complex financial transactions and using the saved time in other important operations, businesses should seek help from financial service providers. These experienced professionals are adept at taking up their client challenges, creating strategies, and deploying them to build opportunities in service, allowing them to grow financially. Doing so can help businesses achieve their financial acumen and set them apart from their competitors.