A first category of harmful practices involves attempts to lock the seller or buyer into a binding agreement, even though no actual work or specific expertise has been brought to the table. The classic trick used to persuade the seller is to dangle the alleged interest of a major corporate group, which then vanishes into thin air right after the mandate is signed. If the seller grows suspicious or hesitates, they may sometimes become the target of outright harassment. In the event of a firmer refusal, the intermediary might try to distribute the seller's profile anyway to convince potential buyers that they hold a mandate, aiming to extract more or less binding commitments from them and force their way back into the deal. These aggressive, heavy-handed tactics are obviously damaging for the seller and unmanageable for a reputable M&A advisory firm that has been properly commissioned. In some cases, one must even conclude that the market has lost trust in the deal altogether.
Other intermediaries do not hesitate to work without a mandate or under an extremely vague one. It is not uncommon to see mandates with no end date or with clauses that excessively protect their exclusivity. Indeed, when a seller wishes to terminate the agreement and the firm sends over a list of potential buyers on which they would still collect a commission—even after the mandate has expired—it is unacceptable for that list to resemble a phone book rather than a refined roster of parties who actually demonstrated genuine interest by signing a non-disclosure agreement (NDA).
To avoid falling into these traps, one must select a professional firm whose core business is sell-side advisory. An intermediary's effectiveness is judged by the clarity of their communication and the concrete results they have achieved. One should not be blinded by vague assertions or opaque financial jargon. Rather than a so-called international network with offices in major financial centers, it is a strong local presence that provides a true mark of reliability. Asking for references (former clients, bankers, accountants, etc.) who can attest to the individual's professionalism can prove very useful.
The proposed mandate must be written, clear, and comprehensive enough to prevent any misunderstanding. The duration must be reasonable and specific, as one needs to be able to regain their freedom if the assignment does not reach a successful conclusion. Even more fundamentally, the business transfer intermediary must adhere to flawless professional ethics, being at the heart of a delicate and vital process for the company.
Accordingly, they will ensure they pursue regular training to guarantee quality service, and will be honest about their skills or limitations, even if it means turning down an overly complex assignment. They will scrupulously respect the confidentiality of the information entrusted to them and use it exclusively within the scope of their mandate.
Finally, they must maintain absolute objectivity and independence, giving in to no pressure whatsoever in order to avoid any risk of a conflict of interest. In particular, the intermediary cannot accept compensation from the other party during the assignment and must, in all cases, be completely transparent regarding fees.
All of these principles are compiled in the code of ethics that every Sowaccess-accredited intermediary must sign. This subsidiary of Sowalfin, fully dedicated to business transfers in the Walloon Region, offers several services to prospective buyers and sellers. In the event of a breach of these principles, the Sowaccess ethics committee can revoke the faulty firm's accreditation. Accreditation is therefore a simple yet effective way to ensure the intermediary's reliability.
In return for the rigor and expertise one has the right to demand from any reputable firm, it should come as no surprise that they will ask for an exclusive mandate. This exclusivity creates a serene working environment and ensures credibility when dealing with counterparties. Trust must indeed be mutual to maximize the chances of completing the transfer successfully, smoothly, and under the best possible conditions.
Illustration: Clou
