My previous column (Part I of this series) dealt with risks in the valuation of companies, stressing in particular that the higher the risk associated with a company, the lower the value of that company. This is not static: investors’ perceptions of risks constantly evolve as they assess a company and the valuation process is consequently also evolving in tandem.

Everything has its risks, even getting out of bed in the morning. But that is no excuse for not getting out of bed at all: you can also have a heart attack under the duvet, after all.

The same is true for companies. No company is risk-free and business owners need to identify and fully understand the specific risks facing their companies. This is fundamental to good management, building corporate value, and to any due diligence process a business owner may have with investors.

Over the past decade of operating my advisory firm, Euro-Phoenix, I have encountered relatively few instances where a financial advisory firm knowingly breached laws, industry or ethical standards; instances of overt contravention are relatively few and far between.

That does not mean that users of corporate finance advisory services should just assume that the issue of ethics is not important. Ethics are of paramount importance. Allow me to mention some areas where ethical issues can arise:

On the one hand one might say that selling companies is the same anywhere in the world, and there is some truth to this: intellectually, the concepts are the same, the steps to the process are the same, and the reasons for transactions succeeding or failing have common elements all over the world. Having worked on transactions covering more than 40 countries, I can testify to these similarities.

Almost every business owner dreams of hitting the jackpot by going public on a stock exchange. Yet when many find out what is involved in taking their company public, they recoil in horror, rapidly coming to the conclusion that this is not for them. This article summarizes the pros and cons of going public for mid-sized businesses in Central Europe.

The case against going public

The case against going public could be summarized under the following headings:

If you are looking to undertake a transaction such as raising capital or selling your company, a lawyer will be a vital part of your team. This article will first describe the role that a lawyer will typically play in a transaction, then provide guidance on how to select a firm or individual who may best fulfill that role.

The lawyer’s role in a transaction

There are many legal dimensions to a transaction, including:

A financial advisor, like a lawyer, may be an effective advocate of a client’s interests and provide valuable advice that can make the difference between success or failure of a transaction, or provide advice whose implications may be measured in the many millions of euros. And yet there seems to be a pattern of questions and expectations that reveals a lack of understanding of the limitations surrounding the role of financial advisors. I summarize these in the following three “DON’TS” to bear in mind when hiring a financial advisor:

In this article, we will deal with three issues: (1) What is a competitive process? (2) Why use a competitive process in selling a business? and (3) What are the possible drawbacks or limitations of a competitive process?

1. What is a competitive process?