The One Question That Tells You Whether to Hire Them

How many transactions have you personally closed in the last twenty-four months?

Every word in that question is load-bearing, and almost nobody asks it. Owners compare firms on reputation, on a referral, or on a set of letters after somebody’s name, and all three of those are proxies for the thing the question measures directly.

Why each word matters

Personally, because the senior name on the pitch is frequently not the person who will run your deal, and the gap between those two is where engagements go wrong.

Closed, because deals that reached a letter of intent and died are not the same as deals that funded.

Twenty-four months, because buyer appetite, credit, and pricing all move. A firm that was excellent six years ago may be coasting on it.

Not the firm’s lifetime total, because that number is marketing, and a firm with a long history and a thin recent record will quote you the history.

Credentials are a proxy, and the real thing is measurable

The field has no shortage of designations, and a designation tells you somebody sat an exam and paid their dues.

Proxies earn their keep when the real thing cannot be measured. Transaction experience can be measured, so measure it. Hiring on the credential instead of the record is not merely unhelpful; it is dangerous, because the credential feels like diligence. An owner who checked the letters believes they checked something.

The disciplines a credential stands in for are still real: tax treatment, valuation, capital structure, and the mechanics of transferring equity. So ask who on the team handles each of them, and whether you get access to those people or only to the person who sold you.

The other five things to look for

A wide range of clients. There is an argument for the specialist who works nothing but your industry, and in a narrow technical field it is sometimes the right argument. More often breadth wins, for a reason that is math rather than philosophy: every industry an advisor has worked is a set of buyer relationships they did not have before, and the buyer who pays the most is frequently not in your industry at all. A specialist knows your competitors. Your competitors are rarely the high bidder.

Breadth also protects you from the firm that has sold eleven companies like yours to the same four buyers, because that firm’s incentive is the relationship with those buyers, and that relationship outlasts you.

Experience running something. Someone who has carried a payroll understands what it costs to lose a key employee mid-process, why you cannot simply produce three years of clean monthly statements by Friday, and what it feels like to justify a decision you made years ago to a stranger. That understanding changes what they ask of you and when, which determines whether the process is survivable. It also gives them standing with buyers, who can tell within minutes whether the person across the table has ever been responsible for anything.

They listen to your goals. Price is only ever part of what an owner wants. The employee who has been there nineteen years. The name over the door. Whether you are willing to stay two years, and whether anybody has asked. How much of the price you are prepared to leave in the buyer’s hands, and for how long.

An advisor who does not draw that out will run a textbook process, and a textbook process optimizes for price, because price is what a textbook can optimize. You can win on price and be unhappy at closing, and owners do, routinely. Listen for this in the first meeting: an advisor who spends it describing their process is telling you what they will do. One who spends it asking what you want is telling you something more useful.

The most important one

Trust and confidentiality. This is the most important item on the list, because once the process starts that control sits almost entirely with your advisor. Every conversation they have is a chance for your name to travel. Ask directly: who will know my company is for sale, at what point, and what will they have seen? Somebody who has thought about it has the answer ready, because the answer is their method.

They do not take every deal. A firm that accepts anything is telling you its business model is volume, and volume firms are compensated for signing engagements rather than for closing them.

The uncomfortable test

Ask what would make them decline your company.

An advisor with standards can describe the companies they turn away, and will sometimes tell you that yours is eighteen months of work short of being ready. That answer is worth more than a signature.

Illustrative. An owner of a commercial solar installer interviewed three firms. Two led with their history. The third answered the twenty-four month question with a number, named the two people who would actually do the work, and said her monthly reporting was three months short of being showable to a buyer. She hired the third firm and spent the quarter. When the process ran, five buyers saw a company whose numbers held up under examination, and the one who paid the most was an electrical contractor she had never thought of as a competitor.

The other two firms would have taken the engagement that week.

What picking wrong costs

Not a bad fee. One buyer instead of five.

The wrong hire spends the one thing you cannot rebuild, which is a market that has not yet seen your company. Once the buyers you most wanted have looked at a badly prepared business and passed, you do not get to show it to them again.

The fee is the only cost of this decision you can see before you make it. It is also the smaller one.

More on this: Your CPA, Your Attorney, and the Person Who Actually Sells Your Business; The Firm That Sold Your Friend’s Company May Be Wrong for Yours.

---

This is what we do. Prism Edge answers the twenty-four month question with a number, names the people who do the work, and will tell you if your company is a quarter or a year short of being ready to show. The companies we decline are part of the method, because a process that goes out early burns the only market you get.

The full chapter on telling a good advisor from a bad one is in The Business Sale, free to download here.