Working with Unlicensed Intermediaries Too Risky a Business, Says M&A Advisor

Atlanta, GA, September 20, 2007 – Many intermediaries offer privately owned, middle market companies guidance on selling their business. A growing momentum for increased enforcement of federal and state laws concerning transactions that involve the sale of stock rather than assets makes a done deal facilitated by an unlicensed advisor anything but.

“When a business closes a deal with an unlicensed intermediary, that done deal is not completely done. There is a right of rescission that looms for several years,” reveals Mark Jordan. The Managing Partner of VERCOR, a middle market investment bank, warns that choosing an unlicensed advisor can wreck havoc on a business seller’s financial outlook and future goals.

Mid-size companies seeking to sell their business commonly engage the services of investment banks to facilitate deals. In turn, investment banks provide access to prospective and active buyers, private equity groups and guidance throughout the transaction process. They cannot give that advice without restrictions. When real estate is involved in a deal, in some states, the advisor must be real estate licensed. A more widespread regulation applies to intermediaries arranging mergers and acquisition transactions with securities. According to federal law, someone facilitating the sale of a company’s stock must be securities’ licensed.

Overstepping this law could have significant consequences to investment banks and company sellers. In California, Governor Schwarzenegger signed Assembly Bill 2167 making it possible for buyers to have a right of rescission for five years from transaction if an unlicensed adviser executes the deal.

Jordan warns that while large transaction investment banks (firms handling deals over $100 million) typically meet all license requirements for every deal, many middle market ($10-100 million) and main street ($2-3 million) firms do not. That requirement should be the top of a business seller’s list when interviewing prospective advisors. Jordan adds, “We are talking about people unable to move onto the next stage of their careers or lives because they didn’t ask one simple question ‘Are you appropriately securities licensed?’ No business owner should take that risk.”


About VERCOR
VERCOR is a leading provider of middle market investment banking services with 13 offices worldwide. Specializing in transactions for companies with revenues of $10 to $100 million, VERCOR offers extensive expertise in all stages of the business sale from concept to completion. VERCOR experts have executed transactions totaling over $600 million in value. For more information about VERCOR, visit www.vercoradvisor.com.

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