2012 will be a big year for corporate transactions. The goal of all these transactions is to create shareholder wealth by translating historic effort into immediate cash or near-term cash. That may seem overly simplified or stating the obvious, depending on your viewpoint. Whether your corporate objective involves acquiring intellectual property for competitive advantage, buying a company for rapid entry into a new market, or selling a division to focus on the bigger prize, meeting the personal motivations and needs of shareholders and senior executives is what makes or breaks the deal.

Unless the deal creates tangible wealth that these shareholders and senior executives can touch and feel then the deal is heading no where, unfortunately slowly, not fast. And slow in transaction terms means ‘very costly’. So, how do you avoid unnecessary wasted time and costly professional advisors fees? Simple, learn how to pick a good corporate advisor. So, here’s my view on the 7 questions you need to ask yourself and your corporate finance advisor before knowing whether they are a ‘good fit’ for your corporate transaction objectives.

1. Does the corporate advisor ask great questions? (This means they listen first).
2. Who specifically will do the detailed financial modelling and valuation work? (Don’t let this aspect be farmed out or down the chain).
3. What aspects does the corporate advisor need to seek outside opinions on? (Good corporate advisors can predict who else will be needed, and they invite them in early, e.g. co-advisors, IP specialists, etc).
4. Has the corporate advisor pushed back on your stated objectives and taken time before signing you up? (Deal-makers should add more than just process. Good advisors tell you what you need, and don’t just accept what you think you want).
5. Do you really want a ‘yes-person’ to represent you to external parties? (Think about it, if you state a position and the advisor doesn’t question the rationale or look for evidence to support what might be an assumption on your part, then how likely is it that the advisor will do the same in external negotiations. Highly!)
6. What qualifications and deal experience do you have? (As basic as it sounds, many corporate advisors may have only had partial involvement in a deal. You need someone who has been involved in every aspect of a deal and seen the deal from start to finish, over and over again).
7. Are you licensed for what we are proposing to do? (A sign of quality standards being met are the various authorities from the Australian Securities and Investment Commission. Ask how the corporate advisor adheres to these independent standards and how they will legally achieve the transaction objectives).

2012 will be a big year of deal setup and transaction execution. The last 4 years have seen lower level of deal volumes due to the GFC. For those businesses that survived the hard times and emerged with improved businesses, 2012 represents big opportunities for consummating great transactions that will generate wealth and cash. Good luck with your transactions and enjoy the profits along the way.