July 5, 2024
Business brokers, M&A advisors and investment bankers are at the forefront of M&A deals. While M&A advisors, business brokers and investment bankers all play vital roles in the M&A ecosystem, their areas of expertise, the services they provide, and the types/sizes of transactions they typically handle vary significantly.
A: In general, Business Brokers focus on smaller business sales, while M&A Advisors handle mid- to large-sized transactions, and Investment Bankers specialize in providing advisory services to large companies, corporates and multinationals looking to raise capital or execute mergers and acquisitions. Learn more about the differences between business brokers, M&A Advisors and Investment Bankers here.
In the context of mergers and acquisitions, business brokers primarily focus on facilitating the sale of micro- to small-sized businesses (companies with an annual turnover of less than $5 Million). Their expertise lies in marketing these businesses for sale, identifying potential buyers, assisting with the negotiation and deal closing. More on the role business brokers play here.
M&A advisors specialize in guiding mid- to large-sized companies (those with an annual revenue of between $5 million and $150 million) through the complex merger or acquisition process. Their expertise spans strategic planning, valuation, due diligence, negotiation, fostering trust between buyer and seller, and deal structuring. They often work closely with the company’s senior management to align the M&A strategy with the company’s overall strategic goals. More on the pivotal role M&A advisors play here.
In M&A transactions, investment bankers are involved in larger, more complex deals (typically for companies with an annual revenue of $150 million-plus). Investment bankers provide these companies with services such as financial modeling, deal structuring, and arranging financing. They possess deep knowledge of capital markets and have extensive networks of potential buyers and investors. More on the role investment bankers play here.
A: Brokers are particularly valuable for micro- to small-sized businesses (those with an annual revenue of less than $5 million) that may not attract the attention of large investment banking firms due to their size.
A: In general, mid- to large-sized businesses with an annual revenue of between $5 million and $150 million should engage M&A advisors when they require expert guidance to navigate the complexities of an M&A transaction, especially when strategic alignment and detailed due diligence are critical to the deal’s success.
A: Larger companies (revenue of more than $150 million per annum), corporations, multinationals or those involved in extremely complex transactions should engage investment bankers. Their expertise in finance, capital markets, and regulatory compliance makes investment bankers invaluable for executing large-scale M&A transactions, or when raising capital is a component of the deal.
A: A basic rule of thumb is to choose a M&A professional based on your company’s annual turnover. If your business’ annual revenue is less than $5 million a business broker may be best positioned to handle the M&A process. If your business’ annual revenue is between $5 million and $150 million, you’ll generally gain the most benefit from a M&A advisor. And if it’s a large corporation and/or a particularly complex financial transaction, an investment banker may be best placed to assist in your M&A transaction.
This rule of thumb is by no means absolute; there are many exceptions. But it’s a good place to start looking for a professional that’s best suited to your needs. Whichever route you choose, it’s always advisable to interview more than one M&A professional, asking each the same questions for direct comparison. Here’s a list of questions to ask prospective M&A professionals during the interview process.