When you’re gearing up to buy and sell or merge a business, one of the first things to consider is who will guide you through the process: a business broker or an M&A advisor. While both specialize in business transactions, their roles, expertise, and the scale at which they operate differ. Understanding the nuances of “M&A advisors vs business brokers” can help you choose the right partner to match your goals. Business brokers often focus on smaller deals, while M&A advisors bring specialized knowledge for more complex, high-value transactions. Let’s explore these roles to find out which fits your needs best.
What are business brokers? How do they fit into the process of selling or buying a business?
The quick answer is that these professionals act as invaluable guides for buyers and sellers, especially in small to mid-sized deals. Business brokers are responsible for easing the deal for both sides by managing important processes that might otherwise feel overwhelming for business owners.
One of their main responsibilities is conducting a thorough business valuation. They look into a business’s financial records and assets, observe the industry in which the company operates, and use market benchmarks to determine the real price of the company. With an accurate valuation, brokers help sellers set realistic expectations and attract interested buyers. They also try to push forward with the seller’s price but, at the same time, make sure that the deal is fair to the buyer.
Beyond valuation, business brokers actively promote the business by reaching out to prospective buyers, creating marketing materials, and screening potential buyers so that only serious ones gain access to pertinent figures and data. They facilitate negotiations, ensuring buyers and sellers align on terms that work for both sides.
What are M&A advisors? Mergers and acquisitions advisors specialize in guiding business owners through the tedious, time-consuming process of selling or merging their companies.
However, they don’t just take on every kind of business. They often handle deals in the multi-million-dollar range, and their services are indispensable in “middle market” transactions. Figure-wise, they deal with businesses valued from $15 million up to $100 million.
An M&A advisor’s approach is strategic and sophisticated. Their team, made up of experts with specialized roles, brings a range of expertise to the table, including deep networks of potential buyers such as private equity groups, strategic buyers, and sponsors. For business owners, this network is invaluable for reaching qualified buyers willing to pay top dollar. M&A advisors are also selective, taking on deals they believe have strong market potential, and they guide clients through each step, from valuation to closing. Although their fees include a success rate plus upfront costs for creating marketing materials, their services provide significant value for business owners ready to navigate the complexities of mergers and acquisitions.
The terms brokers and M&A advisors are often used alternately since both professionals handle businesses for sale and support business owners through complex transactions. But if you search for “M&A advisors vs business brokers,” you will see that despite some similar functions, they are still different.
Both types of professionals assist with general tasks like business valuation, marketing, and buyer qualification so business owners can work toward pushing the value of their business further. However, while business brokers usually handle smaller, local transactions, M&A advisors typically focus on larger and more complex mergers and acquisitions that may even extend to an international network of buyers.
Further studying the service range of a business broker vs. M and A advisors, you’ll discover that the scale and scope of your business are important factors when deciding between these two professionals. Business brokers primarily connect local business owners with nearby buyers, keeping things relatively straightforward. M&A advisors, on the other hand, often bring a broader skill set to the table, including strategic advice, detailed contract negotiations, and access to international markets. This can be invaluable when selling a larger business or navigating intricate transactions that require deeper expertise and broader reach.
If you’re looking at the one main difference between advisor and broker focusing on M&A deals, it would be the size of the businesses they mainly work with. The former deals with middle-market companies while the latter offers its services to mainstreet businesses.
When it comes to the scope of work, the structure of the team, and the range of expertise, business brokers and M&A advisors vary. We summarize these differences in the points below:
Before you approach American business brokers & advisors and narrow down your list of broker dealer or investment advisor firms, you need to observe the state of your company and list down what you need first. Having this idea will help with your decision of who to deal with.
Cross-check their expertise and experience against your company’s specific requirements to ensure they align with the expertise needed for the upcoming deal. For businesses with simple structures and operations, the expertise of a broker will be enough. On the other hand, larger companies with complex structures will require the acumen of an M&A advisor.
The support provided by a business broker often has its limits. They typically offer a list of buyers or sellers within their specific area. In contrast, M&A advisors take a more strategic approach, collaborating closely with clients to identify and pursue fresh opportunities that align well with the company’s goals through investment advice and financial planning, among others. It’s also best to speak to the financial professionals themselves to determine if it’s the right fit.
Just one caveat: If your business is considered a mainstreet one, it’s likely that your project will not be prioritized by someone dealing with larger companies. Those unsure which category they fall into, they can seek the help of mid street brokers. So if your revenue is between $1M to $30M, a mid street advisor might be the best person to represent your company.
Making the decision to hire an advisor is a pivotal step when you sell your business. The expertise of American business brokers and advisors can significantly influence the result of the deal.
It’s essential to align your choice with the specific needs and goals of your business, making sure that the professional you engage with has the right experience and approach.
WebsiteClosers.com stands ready to assist you in this important process. Their team understands the nuances of business sales and is dedicated to helping you attract the right buyers at the optimal time. Schedule your call today and take that huge step toward a successful exit.
Thank you for your interest. We're happy to help in your acquisition search.
Please help us by providing an honest review. We focus on those that take the time to review our company.
Leave a Review