Scam Alert

Unscrupulous Practices in Mergers and Acquisitions

Over our years in business, we've encountered a common concern from clients who feel they've been taken advantage of by firms claiming to sell their businesses. Some firms prioritize quick upfront payments over genuinely seeking the right buyer for their clients.

Valuation Fees

A prevalent issue is clients paying substantial upfront fees for initial valuations. Unless needed for specific reasons, these fees can be a scam by firms with no intention of selling your business. A competent banker can provide a reasonable valuation estimate without such charges. The true value, however, emerges during the bidding process when buyers reveal their offers. Avoid unnecessary valuation fees unless your situation demands it.

Retainers

Contrary to common practices, it's essential to question the need for retainers. Just as you wouldn't pay a realtor for an unsuccessful sale, ensure your investment banker is rewarded for successfully selling your business, not just attempting it. Retainers may be justified in uncertain markets or specialty businesses with limited buyers, but this should be transparently communicated upfront. If a retainer is suggested due to perceived disinterest on your part ensure it is refundable if you are certain and confident in a sale process. Additionally, retainers should be part of the total fees, not an additional cost.

Stay informed and protected throughout your sales transaction.

For further clarification, feel free to contact us.