The value of using a corporate finance advisor

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    Whether you’re buying or selling a business or looking for finance to accelerate growth, raising capital can be a daunting and time consuming process. A question often asked by owners or management teams is whether they can manage that process alongside their day to day commitments of running a company or should they appoint a corporate finance (CF) advisor to reduce the pressure and oversee the entire process.

    Published: May 11, 2023
    Focus: Insights

    Advice from a corporate advisory firm will cost money, however Alex Rothwell, Investment Director at Maven, believes the benefits to appointing a reputable firm is worth the cost outlay. Here are his thoughts:

    Strategic guidance

    A good CF advisor can provide valuable strategic guidance to help businesses make informed decisions about how to allocate resources and prioritise activities and avoid costly mistakes. This can include advice on financial management, risk management and M&A activities. Experienced CF advisors are skilled in building financial models that can help businesses understand the potential impact of different scenarios on their financial performance. This might include forecasting future revenues and expenses, analysing cash flow projections, and assessing the impact of various financing options.

    Access to capital

    A good CF advisor will also have an established network of SME investors and be able to provide introductions to investors covering a range of funding types to help fuel growth, including private equity, venture capital, debt financing and crowdfunding. This can be particularly important for early-stage companies that have limited financial resources or lack the track record to secure financing from traditional sources. With the right financing in place, businesses can invest in key growth drivers such as research and development, marketing, and hiring.

    Valuation

    A good CF advisor can provide an objective and accurate valuation of a business, which can be crucial for raising capital, engaging in M&A activities, or planning for future growth. By having a clear understanding of the business's current position and potential value, entrepreneurs can make more informed decisions about how to invest their time and resources and which are the best strategic options for the business. Experienced CF advisors typically have a deep understanding of the industries in which they specialise, which allows them to provide valuable insights and advice on industry trends, competitive dynamics, and other factors that can impact a business's financial valuation.

    Deal structure

    A good CF advisor can also help to structure a deal in the way that is most beneficial to the business. They can help negotiate terms that protect the company’s interests and ensure that the transaction.  is structured in a way that aligns with the company's long-term goals.

    Although working with the wrong advisor could potentially create additional challenges for a business, such as additional costs, misalignment of interests and segregation of duties within the management team, a strong CF advisor will generally bring more positives than negatives to the table. While there are no guarantees of success in the business world, working with a reputable and experienced CF advisor can provide early-stage growth businesses with valuable support and guidance that can increase their chances of success.

    Business success requires a team effort where individual strengths combine to create a greater whole. If you would like to find out more about how Maven has worked with the corporate finance advisory community and senior management teams to help them deliver on their strategic goals, please get in touch at funding@mavencp.com

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