Buy-Side Engagement: Is it right for you?

With more than two decades of experience in the industry, Stark Capital Solutions has had the opportunity to assist Independent Operators through a variety of investment banking engagements.   

Most sale transactions have an advisor who represents the seller through a sell-side engagement.  With most sell-side engagements, it is the job of the advisor to contact all potential acquirers and structure the best deal for the seller.  Buy-side engagements are the exact opposite.  Although not as common historically in the industry, companies looking to grow through acquisition may engage a buy-side advisor to reach out to other companies who may be interested in selling.   

A key trait to consider is companies who hire buy-side representation typically have high price expectations. In our experience, clients who need buy-side engagements are big, well-capitalized companies who aren’t satisfied with waiting around for opportunities to come in organically.  Therefore, they are proactive in their search and are willing to pay a higher price for the targeted businesses they want.  

From our experience, below are the top 4 reasons to consider a buy-side engagement for your company: 

1. Advisors have a deep contact list with established relationships. 

2. Operators may be more open to discussions about selling when working with a neutral third party instead of a competitor. 

3. There can be value in off-market deals. Most operators aren’t “for sale” but are likely to be intrigued with the idea of selling once the dialogue starts flowing. Additionally, most sellers, and buyers alike, prefer “silent” transactions that are private and don’t require running a formal process. For the buyer, silent transactions help them avoid a potential bidding situation that they might lose. 

4. Advisors can offer deal guidance and protect the buyer’s best interests. With extensive knowledge, advisors can educate buyers about current market value trends, assist in organizing and reviewing pertinent due-diligence information, and can be the helping hand that creatively works around common issues. When advisors help share the burden of due-diligence, owners can instead focus on running their company and ensure their employees carry out their day-to-day functions.  

Throughout our time in the industry, we have built a reputation for honesty and integrity with many Independent Operators.  With a trusted reputation and deep advisory experience, we have found significant success with our buy-side engagements.