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The Invaluable Role of Mediator in M&A

Blog Refresh - Is Mediation For Your Deal a Good Investment

Whether you’re buying or selling a business, there are a few players that are “must-haves” on your transaction team: personal lawyer, CPA/Tax professional, representative of your IBD/Custodian, personal stakeholders, and a non-advocate, industry-experienced mediator. 

The role of each of these players is important to the overall success of your deal, however, the mediator can sometimes be overlooked–often to the disadvantage of your deal. So, why are they so important?

While some may view mediators as an added–and perhaps unnecessary–expense or even just another voice to muddy the conversation, more often than not this seat at your table will end up saving you time, money, and headaches. An intermediary who has industry-specific M&A experience can:

  • Guide both parties through comprehensive due diligence to avoid any late-in-the-game surprises that could derail the deal.
  • Help both parties understand fair and reasonable deal terms as well as business value that considers the relationship-based nature of the financial services industry.
  • Ensure you have complete documentation in place for the transaction, including everything you’ll need to transfer clients and staff as well as remain compliant with any federal, state, and organizational regulations.
  • Identify potential roadblocks before they arrive by anticipating red flags and keeping an eye out for common miscommunications between parties.
  • Streamline negotiations and get the deal closed on a shorter timeline by leveraging their expertise to keep things on track and make sure all the boxes are checked throughout the process.
  • Improve post-closing client retention rates by establishing expectations for transitional involvement and facilitating a collegial working relationship between buyer/seller.
Most importantly, a mediator is a non-advocate voice at the table who is there to prioritize the success of the overall transaction. Having experienced eyes on the deal looking at it from all angles can create an incredible return on investment by improving results for both buyers and sellers in terms of success rate, speed, and value.
When we look at what makes transactions succeed or fail, we can see that unmediated deals are fraught with challenges. Advisors often relate that they commit four to five years to their acquisition strategy before turning to an expert for help. Considering that successful acquirers can purchase a new practice each year, five years amounts to a substantial investment and a significant wasted opportunity.
Oftentimes, when a buyer and seller who are in the midst of a deal come to the FPT for help getting their deal over the finish line, its due to one of the issues outlined above. And, considering that those roadblocks usually result in the deal falling through completely, finding a way back to the path and helping a successful deal to fruition is all the more satisfying.
When it comes time to enter the M&A arena–as either buyer or seller–make sure you’ve got a mediator at the table who is focused on completing the deal to the satisfaction of all parties and, ultimately, to the benefit of the future of the business and its clients.



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