Quick answer: M&A advisors and business brokers both intermediate the sale of companies, but they commonly serve different parts of the market. Brokers tend to work with smaller, owner-operated businesses sold to individual buyers. M&A advisors tend to work with larger companies sold to strategic and financial buyers through a structured, competitive process. The right choice depends on the size, complexity and likely buyers of your business.
Key points
- The labels overlap and some firms do both, so evaluate the process and the likely buyers, not the title.
- Smaller businesses are often valued on seller’s discretionary earnings and sold to individuals. Larger businesses are valued on EBITDA and sold to companies and investors.
- A competitive process with a broad set of qualified buyers is more important for a business with institutional buyers than for a small owner-operated shop.
- Whichever you choose, ask who does the work, how buyers are found and screened, how the fee is structured and how conflicts are handled.
Why the distinction matters
Owners who decide to sell often start with a simple question: who should help me? The answer depends on what kind of business it is, because intermediaries tend to specialize by the size of company and the type of buyer. The two most common choices are business brokers and M&A advisors.
The categories are not rigid. Some firms serve both ends of the market, and the best of each category runs a disciplined process. The point of comparing them is to match the intermediary to the business, not to rank one above the other.
The usual differences
| Business broker | M&A advisor | |
|---|---|---|
| Typical business | Smaller, owner-operated | Larger, with management beyond the owner |
| Typical buyer | Individuals, often using acquisition loans | Companies and investors, strategic and financial |
| Earnings measure | Usually seller’s discretionary earnings | Usually adjusted EBITDA |
| Marketing | Listings and broad exposure to prospective buyers | Targeted, confidential outreach to selected buyers |
| Process | Often more standardized | Customized, with managed timelines and competitive bidding |
| Materials | Listing summary, financial summary | Teaser, confidential information memorandum, management presentation |
| Valuation | Often a pricing opinion based on multiples of SDE | Detailed analysis of earnings, buyers and structure |
| Fees | Often a percentage of the sale price | Often an upfront or monthly fee plus a success fee |
These are common patterns and not rules. A given firm may differ on any line.
How the work differs in practice
Finding buyers. A broker serving small businesses often markets broadly because the buyer pool is large and fragmented. An M&A advisor serving mid-sized companies approaches a defined list of strategic and financial buyers who have the interest and capacity to acquire, and keeps the owner’s identity confidential until the buyer is qualified.
Pricing. For small businesses, a reasonable price often follows a multiple of seller’s discretionary earnings. For larger ones, buyers price on adjusted EBITDA, and the analysis considers buyer types, synergies, structure and the effect of working capital and debt. The comparison of SDE and EBITDA explains why the two cannot be mixed.
Process control. A business with institutional buyers benefits from a managed process in which several qualified parties submit bids against a timeline. The guide to the sale process lists the stages. For a small business with an individual buyer, a simpler process may be enough.
Negotiation and structure. Larger deals often include elements such as rollover equity, earnouts, seller notes and detailed indemnity terms. An advisor experienced with those structures can help an owner weigh them. The strategic versus financial buyer comparison shows why structure varies by buyer type.
Which fits your business
Start with the likely buyer and work back.
A broker’s model usually fits when the owner works in the business full time, there is little management below the owner, the buyer will probably be an individual who intends to run it, and the business is small enough that a standardized process serves it.
An M&A advisor’s model usually fits when the business has a management team, earnings are large enough to interest companies and investors, confidentiality matters because competitors or customers could learn of a sale, and the owner wants a structured process that brings competing offers.
In between, an owner may want a valuation first to see which way the business leans. A transactional valuation shows which earnings measure buyers will use and who is likely to pay the most. The overview of transactional valuation explains the analysis.
Questions to ask either one
- What size of company do you usually represent? Experience at your size tells you who they can reach and how they price.
- Who will work on my sale? Ask who prepares the materials, contacts buyers and negotiates, not only who presents the proposal.
- How will you find and screen buyers? Ask for the process, not promises about price.
- What does your fee include, and what happens if no deal is done? Understand upfront costs, the success fee and its basis, and the expenses charged separately.
- How do you handle confidentiality? Ask how they protect the owner’s identity and what information buyers see at each stage.
- How do you handle conflicts? Ask about relationships with buyers and whether the firm ever represents both sides.
Where The Impetus Group fits
The Impetus Group provides sell-side and buy-side M&A advisory and prepares transactional valuations. The valuation is a separate engagement with its own scope and fee. It is designed to give owners and buyers a clear view of price before they commit to a process. The sell-side and buy-side comparison explains the two advisory roles in more detail.
Frequently asked questions
Is an investment banker the same as an M&A advisor?
The terms overlap. Large investment banks run M&A advisory groups for big transactions, and independent firms provide similar services for mid-sized companies. What matters for an owner is the firm’s experience with companies of similar size and sector, the individuals who will work on the deal and the process they follow.
Which is cheaper, a broker or an M&A advisor?
It depends on the fee structure and the work involved, and a lower fee is not the same as a lower cost if the process attracts fewer qualified buyers. Compare what each fee covers, what happens if the deal does not close and what the success fee is calculated on.
Can an owner sell without either one?
Yes. Owners sometimes sell to a buyer they already know, such as a partner, employee or competitor. A sale without an intermediary can work when there is a clear buyer and a fair price, but it leaves the owner without a competitive process and without help in negotiation and diligence.
How do I know which one my business needs?
Look at the likely buyers. If the business will be bought by an individual who will work in it, a broker’s model fits. If companies and investors are the likely buyers, and the process needs to be competitive and confidential, an M&A advisor’s model fits. A valuation can show which measure of earnings and which buyers apply.
Thinking about a sale or an acquisition?
The Impetus Group provides sell-side and buy-side M&A advisory, from preparation and buyer outreach to negotiation and closing. A transactional valuation is often the first step, scoped and priced separately.
Related guides
- Sell-Side vs. Buy-Side M&A Advisory: What Each Does: Sell-side advisors represent the owner selling a company. Buy-side advisors represent the acquirer. See what each does, how they differ and when you need one.
- SDE vs. EBITDA: Which Earnings Measure Applies to Your Business?: SDE adds back one owner’s pay to show what an owner-operator earns. EBITDA treats the owner’s role as a market-rate cost. Learn which measure fits your business.
- How an M&A Sale Process Works: Stages From Preparation to Closing: A step-by-step view of a sell-side M&A process: preparation, marketing, bids, the letter of intent, diligence, the purchase agreement and closing.
- Transactional Valuation: What It Is and How It Works: A transactional valuation estimates what a strategic or financial buyer would pay for a business. Learn what goes into one and how it differs from an appraisal.
- Strategic vs. Financial Buyers: Who Pays More and Why: Strategic buyers pay for synergies and fit. Financial buyers pay for cash flow and returns. See how each values a company and which is likely to pay more.
- Transactional Valuation vs. Appraisal: Which Do You Need?: A transactional valuation estimates what a buyer would pay. An appraisal estimates value under a legal or tax standard. See how they differ and which one fits.
This guide is general education. It is not a valuation opinion, appraisal, investment advice, or legal or tax advice. How these guides are made.