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Business Broker, M&A Advisor or Investment Bank? Which is right for you?

Selling your business is not a do-it-yourself project. Engaging a professional intermediary to prepare your company for sale, negotiate the deal and manage the due diligence process will greatly increase your chances of a maximum value sale. But what type of intermediary is right for you? The answer depends on the size and sophistication of your company.

Chart showing the company sizes that business brokers, M&A Advisors and Investment Banks typically represent.

Business Brokers

Business brokers are individuals or companies that facilitate the buying and selling of small businesses, typically with sales of less than $ 2 million per year. They’re licensed and regulated at the state level and, in many states, business brokers must also be real estate brokers. They typically represent “main street” businesses like retail stores, restaurants, inns and others where real estate makes up a significant portion of the business’ overall value. Business brokers list businesses for sale the way real estate is listed for sale: that is, on one or more websites that show a summary of the company and an asking price. More established business brokers might distribute a deal to an internal database of potential buyers, but they generally don’t actively search for strategic buyers. The most frequent buyers of these small businesses are individuals who are interested in buying a company and buying a job for themselves.


Merger and Acquisition Advisors

Merger and Acquisition Advisors were differentiated from Business Brokers via a 2022 federal law.

Merger and Acquisition Advisors (M&A Advisors) are individuals or firms that facilitate the buying and selling of privately held businesses with sales of up to $250 million per year. These transactions require greater knowledge of the intricacies of deal structure and financing. M&A Advisors provide more comprehensive services than business brokers, including business valuation, strategic guidance, deal negotiation, due diligence support and post-closing consulting. M&A Advisors rarely establish an asking price for a business. Instead, M&A Advisors will structure a sale process designed to simultaneously engage hundreds or thousands of strategic and financial buyers. The eventual sale price is established by a competitive bidding process.


Investment Banks

Investment banks are large institutions that offer a broader range of financial services, including M&A advisory, capital raising, IPOs, issuing debt, underwriting, and stock trading. Regional investment banks represent public and private companies from $50 million in sales and up. National investment banks represent companies that range in size from $100 million per year in revenue to the largest multi-national corporations. Investment banks are regulated by the SEC and the Financial Industry Regulatory Authority (FINRA).



Which Intermediary is Right For You And Your Business?

Business brokers, M&A Advisors and investment bankers all play a role in the world of mergers and acquisitions, but the clients they serve and the sophistication of their services vary significantly.


Selecting the right intermediary depends on a number of factors including company’s size, profitability, intellectual property, type of customers served and the type of buyers that are likely to be interested. For example, a company with $4 million in annual revenue that provides complex or patented products to large corporations may require the more sophisticated services of an M&A advisor despite their relatively small size. That company will likely appeal to sophisticated buyers all over the country. Conversely, a $4 million per year company that provides a commodity service to a local community might be well served by a business broker who will focus on attracting local buyers.


 

About Venture 7 Advisors:

Venture 7 Advisors is a team of merger and acquisition advisors who assist the owners of small and mid-sized companies to plan and complete the sale of their business. We find the best buyer to meet each business owner’s financial and legacy goals. We represent clients in consumer products, distribution, manufacturing, B2B services, construction, telecommunications, and eCommerce from offices in Burlington, Vermont, the Hudson Valley, New York, and Western Massachusetts.    


We're here to talk about your situation, provide information, discuss your options, and put things in perspective. Contact us at any time:


Bryan Ducharme

Managing Partner

Mobile: 802 578 6462



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