What Type of M&A Advisor Should You Choose for Your Acquisition?

You had an idea. You nurtured that idea from a simple scratchpad outline to an MVP. You launched your startup. You iterated your product. You scaled. Then sometime after that you decided it was time to sell your startup. What luck, you’ve found Acquire.com. Now what?

You know enough to know what you don’t know. You want to bring on a professional to assist you, but who? Understanding what type of professionals are available to you, and who would be the best fit for your assignment is your first, critical step. Let’s explore them now. 

Business Broker vs. M&A Advisor vs. Investment Banker

These characters intermingle somewhat since each can help close your transaction. With such fuzzy lines of distinction, deciding between them can be a complex task. However, we can solve that riddle now for you using one of their most defining features: the size of the transaction.

Again, you’ll find grey areas and no strict definitions, but we generally see businesses falling into one of three buckets with a different advisor for each. The most suitable professional depends on the size and complexity of the business, but is most easily defined by revenue.

Main Street (up to $1M in TTM revenue)

The first category, Main Street, would be best suited for a business broker. Business brokers typically represent opportunities up to $1M (however it is not uncommon to see a business broker close a $5M transaction) and have success fees based on a percentage, usually 8-10 percent of your sale price upon a successful close.

Lower-middle Market ($1M-$25M)

Next up, the Lower-middle Market brokers or M&A advisors. This group can handle transactions up to $25M. The expected fee structure under this example sees double Lehman Pricing, also a percentage of the sale, however on a scale. This is 10 percent on the first million, 8 percent for the second, 6 percent on the third, 4 percent on the fourth million, and 2 percent of the balance of the consideration.

Middle Market ($25M and up)

And finally, the Middle Market players. You’re now looking at M&A firms and investment banks. They are full service and have everyone on staff to facilitate your transaction from soup to nuts. This group will work on the larger deals of $25M upwards. The pricing here is a percentage from 1-4 percent and may have retainers and other upfront fees to cover their heavy cost.

These are typical fee structures you could expect to see. In addition, main street brokers and M&A advisors often have minimum commissions built in.

Having a professional alongside you when selling or buying a business can make a definitive difference – not only in maximizing the value of your transaction, but also streamlining what can otherwise be a complex, challenging process. Advisors help you reach max consideration (meaning you walk away with more) and act as a safety net for your transaction.

How Our M&A Advisor Directory Differs 

When forming the directory, the main professional categories were clear: Brokers, M&A Advisors, attorneys, CPAs, valuation experts, lenders, and escrows. We onboarded advisors for all the size categories we work with, from the truly Micro (over $100K ARR) to the millions and then tens of millions.

Historically, your choice was all or nothing when deciding to hire an advisor. We are purposefully breaking the status quo. It should not have to be one size fits all in our brave new world. Our advisors agree that it’s time to rethink how deals get done. 

We’ve put a lot of thought into offering new pricing schemes that make better sense for you in this marketplace. In addition to standard structures, we’ve developed hourly, flat-fee consulting, and other hybrid agreements, and continue to develop these according to your feedback.

Here’s a short list of services of advisors offer:

•         Developing a pricing strategy

•         Assembling an offering memorandum

•         Creation and execution of a marketing plan

•         Qualification of potential buyers

•         Communication management

•         Facilitate negotiation of deal price and terms

•         Escrow supervision

•         Mental preparation for this process; prep and education

•         Helpful consultive road maps, pre, during and post-sale.

That said, if you need someone to manage your acquisition from beginning to end, you can find that advisor. If you want more of a consultative relationship, only needing a la carte services like legal review, or a valuation, we can march you there as well.

Request an Advisor to Help You Sell

Our advisors are here to support you and the wider startup community. They understand we’re breaking the status quo, and our combined advocacy will shape how deals are done moving forward.

Need help fast? Click the “Hire expert help” button on your seller dashboard. Our counsel, James Graves, will then match you with the right expertise for a no-obligation consultation.

James Graves- M&A Advisor Manager

You can also contact James directly for an introduction on james@acquire.com.

For the love of startups.  

The content on this site is not intended to provide legal, financial, or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional before entering into any M&A transaction. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any M&A professional. 

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