M&A advisory firms: what they do, what they cost and how to choose one

An M&A advisory firm runs the sale or purchase of a company on its client's behalf: it values the business, prepares the materials, finds and qualifies the other side, manages the competitive process and the negotiation, and keeps the deal moving through diligence to completion. Firms sort by the size of deal they work on — global investment banks above $1 billion, mid-market banks between $50 million and $1 billion, boutiques and business brokers below — and charge a retainer plus a success fee of roughly 1–5% of the price, the percentage falling as the deal grows. The right firm for a founder is the one whose last ten deals look like this one.

"Investment bank", "corporate finance adviser", "M&A boutique" and "business broker" describe the same job at different sizes. What separates them is not skill but the deals they see every month: a firm that closed three payments acquisitions this year knows who is buying, at what multiple, and which buyers re-trade the price in diligence. That knowledge is the fee.

What does an M&A advisory firm actually do?

On a sale, five things in order. It values the business and tells the owner what a process is likely to produce. It writes the information memorandum and builds the data room. It approaches a list of buyers — trade, private equity and the ones the owner had not thought of — under confidentiality, and collects indicative offers. It runs the negotiation, from choosing a preferred bidder through the sale agreement, so the owner is never the one across the table. And it project-manages diligence, lawyers, accountants and the regulator's approval to completion. On a purchase the same firm finds targets, models the price, structures the offer and runs the diligence. What it does not do is the legal drafting or the audit: those are the lawyers' and the accountants' jobs, hired separately.

What kinds of M&A advisory firms are there?

Four, by deal size. Bulge-bracket investment banks — Goldman Sachs, Morgan Stanley, JPMorgan — work on deals above about $1 billion and on public companies, with balance sheets that can also lend. Mid-market banks — Houlihan Lokey, Jefferies, Lincoln International, Raymond James — cover roughly $50 million to $1 billion, the range most funded fintech and software companies sell in. Boutiques are partner-led firms of a few dozen people, often specialised by sector (payments, software, financial services) and covering $10 million to a few hundred million; some, like Evercore, Centerview or PJT, are boutiques only in headcount and advise on the largest deals. Business brokers handle owner-operated companies below about $10 million, usually on a listing model closer to estate agency than to banking. A fifth group, the Big Four accounting firms, run mid-market and smaller deals from their corporate finance arms.

How much do M&A advisers charge?

A monthly retainer and a success fee, the retainer usually credited against the fee. The success fee is a percentage of the enterprise value: around 1–2% on deals above $100 million, 2–5% between $10 million and $100 million, and 5–10% at the business-broker end, where a $2 million sale still needs a full process. Most engagements set a minimum fee — often $250,000 to $1 million for a mid-market bank — and a ratchet that pays a higher percentage on value above an agreed target, aligning the adviser with the last dollar. Buy-side mandates charge less on success and more on retainer, since many searches end without a deal. Read the tail clause: it entitles the adviser to its fee if the company sells to a buyer it introduced within 12–24 months of the engagement ending.

How do I choose an M&A adviser for a fintech or AI company?

By their last ten deals, not their pitch. Ask for the list with sizes, buyers and dates; a firm that sold three payments businesses in the past two years knows the current buyers and their multiples, and a firm that has not will learn on this deal. Ask who will run the process day to day — the partner who pitched or an associate — and how many live mandates that person has. Ask which buyers they would call in the first week and why; a good answer names companies and the reason each would pay. For a licensed business, ask whether they have taken a deal through a change-of-control approval with this regulator. Then compare fee proposals on the total at the expected price, including the minimum and the ratchet, not on the headline percentage. Two or three firms pitching against each other is the same competitive process the adviser will later run for the owner.

When do I not need one?

When the buyer is already known, the price is already agreed and the company is small enough that a good M&A lawyer can run the transaction. A pre-emptive offer from a strategic buyer at a multiple the owner is content with, a management buyout, or a sale between shareholders may not justify a 3% fee for a process that will not happen. The honest test is whether competition could move the price: if a second bidder could plausibly add 10–20%, the adviser who brings that bidder pays for himself; if not, hire the lawyer and keep the fee. Even then, a one-off valuation or a fairness opinion from an adviser costs a fraction of a mandate and tells the owner whether the known offer is a fair one.

What is the difference between an M&A adviser and a business broker?

Process and scale. A broker lists a business — often on a marketplace — takes enquiries, and charges a commission at completion, much as an estate agent does; it suits owner-operated companies under about $10 million where the buyer is an individual or a small competitor. An M&A adviser runs a confidential, competitive process to a curated list of buyers, negotiates the structure as well as the price and manages the deal to completion; it suits companies where the buyer is a corporation or a fund and where diligence, regulatory approval and a sale agreement of a hundred pages are part of the sale. The line blurs between $5 million and $20 million, where both operate; there, the question is whether the likely buyer is a person or a company.