News & Resources

Advisory red flags to watch out for during valuation

Mar 15, 2011 Karen Umpierre

Any company engaged in a merger or acquisition needs to conduct a proper business valuation before completing the proceedings. Such a decision often comes with the assistance of a mergers and acquisitions advisor. But how can an executive or company know which advisor is best? AxialMarket provides three warning signs to look out for during the M&A and business valuation process.
 A consultant or advisor who will not provide references or a working history of previous clients should be measured with some skepticism. If the consultant has successfully completed a previous deal or accurate business valuation, he or she should have little reason to withhold a reference. AxialMarket also warns to companies to be on the lookout for "pasta throwers" - an advisor who takes on numerous clients in a given year but has a poor closing ratio. AxialMarket states that such advsiors often lack depth to their work, which could lead to serious shortcomings during the valuation process. Companies should also be watch out for valuation advisors who charge for large sums of payment and material upfront. AxialMarket claims that a strong advisor will have confidence in his or her finishing product and thus "will forego a retainer."