Here are a few questions to ask when evaluating advisors for a sale or capital raise.
1) “In what specific ways will working with you add value?”
This question gets at the heart of every advisor’s sales pitch. To some extent, you should be able to predict an advisor’s answer — think increased ROI, an expedited process, confidentiality, more time to focus on your business, market/industry expertise, etc. However, the more detail an advisor provides off the bat, the better. You may uncover potential value-adds, like specific relationships or experience, that set one potential advisor apart.
2) “What does success look like for you?”
Frame this question broadly and pay attention to how the advisor answers. Do they talk only about achieving a certain return on investment? If you’re like most family business owners, you’re probably interested in financials and fit.
3)“What issues have you encountered when working with family businesses in the past?”
This is a great way to understand the advisor’s approach and attitude when it comes to balancing family dynamics and business priorities, without necessarily airing your own business’s dirty laundry on an initial call.
4) “What work have you done with companies like mine?”
This question does triple duty — it should help you identify advisors who are well-versed with a) companies in your industry, b) companies of your size, and c) companies with similar goals.
5) “What do you see as the biggest challenges for my company in this process?”
This question can help you evaluate whether an advisor understands your business model and the unique factors impacting the road ahead. It will also show you whether they have done their research on your organization ahead of time. Their answer should also give you a sense of the advisor’s attitude toward conflict — will they be more likely to try to smooth things over or are they willing to voice and confront potential challenges head-on.