M&A Advisory Services: What Do Firms & Advisors Do?

As a business owner, selecting the right merger & acquisition advisor can make the difference between a smooth, profitable exit and a stressful process.

M&A advisors bring deep knowledge and handle details that may otherwise be overwhelming for founders. This guide will walk you through the fundamentals of M&A advisory, the benefits of working with an experienced team, and how to select the right option for your needs.

Understanding M&A advisory services

M&A advisory firms guide business owners through selling, buying, or merging companies. Unlike the typical investment banks, which often focus on more significant purchases and public companies, boutique M&A advisory firms cater to private companies, especially in deals between $10 a $250 million.

For business owners, advisory services offer invaluable support in determining optimal timing, targeting potential buyers, and negotiating terms that align with their financial and operational goals.

Some of the most common M&A advisory services include:

• Sell-side advisory: Guiding business owners through the entire sale process, from initial valuation of the business to final negotiations and closing of the deal.
• Buy-side advisory: Helping buyers identify, evaluate, and acquire companies that align with their strategic objectives.

How M&A advisory professionals help

Getting help from an M&A advisor is particularly important for first-time sellers. M&A advisors offer various financial advisory services, including thorough financial analysis and valuation, to ensure a fair and profitable transaction. Here are some of the advantages:

1. Getting an accurate business valuation
   Many founders underestimate or overestimate their company’s worth, leading to missed opportunities or failed transactions. M&A advisors leverage market data, comparable sales, and financial analysis to establish a realistic valuation, ensuring sellers get a fair price for their hard work.
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2. Marketing your business professionally
   Advisors help create high-quality marketing materials that highlight the business's strengths, opportunities, and unique aspects, making it more attractive to strategic and financial buyers.
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3. Sourcing the right buyers for the business‍
   M&A advisors have a pre-existing network of potential buyers —including private equity firms, aggregators, strategics, and individuals. They act as a "first line of defense," filtering out unqualified buyers who are not financially capable prospects for business acquisitions. This helps to protect sellers from unnecessary distractions and streamlines the sale process. While sellers can find buyers independently, the process is significantly easier when established relationships are used.  

4. Structuring the sale process
   A skilled advisor coordinates a structured sale process, increasing competition among buyers and creating leverage to achieve a higher sale price.

5. Conducting due diligence and managing risk
   M&A advisors oversee the due diligence process, reduce communication gaps, and prevent misunderstandings, ultimately protecting sellers from deal breakdowns.

6. Managing exhaustion
   The M&A process can take anywhere from six months to a year. Handling this on top of running a business can be exhausting. By delegating to an advisor, business owners can focus on maintaining business performance without being overwhelmed by the sale process.
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7. Negotiation and closing
   ‍M&A advisors know how to negotiate, based on multiple prior transactions. Having one by your side will help you navigate the negotiation process, and to make sure you don’t leave value on the table.

Read: M&A best practices from top advisors

Types of M&A advisors and investment banks

Understanding the types of advisors available can help you make the best decision:

1. Investment banks
   Investment banks are ideal for large corporations handling high-value, complex deals. While they may have the resources and connections, they often focus on large, public transactions, making them less suitable for smaller deals.
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2. Boutique M&A advisory firms
   Boutique firms, like Boopos, often specialize in specific industries or deal sizes and typically provide a personalized approach. They tend to have robust networks and expertise in sectors like SaaS, ecommerce, and tech-enabled services, making them a better fit for private companies in the range of $10 to $250 million.
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3. Financial advisors
   Financial advisors may offer M&A guidance as part of their service portfolio. While not always specialists in M&A, they can be helpful for businesses with simple structures or owners who require preliminary financial analysis.
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4. Law firms
   Many law firms provide legal advice related to M&A, ensuring compliance with regulatory requirements and drafting contractual agreements. They often work alongside M&A advisors to offer comprehensive deal support.

How to select the right advisory firm

Selecting the right advisory firm involves evaluating expertise, track record, and approach. Here are factors to consider:

1. Industry expertise: Choose an advisor with a strong understanding of your industry. Specialized firms often have an edge due to their knowledge of market trends, key players, and industry research specific to the sector.
2. Reputation and track record: Look into the advisor’s history of successful transactions. Testimonials, case studies, and client references can provide insight into their track record.
3. Network and approach to buyer outreach: An advisor’s approach to finding buyers can significantly impact the success of a transaction. Some advisors aggressively market the business, while others use a more targeted strategy. Discuss the advisor’s approach to see if it aligns with your expectations.
4. Fee structure: Advisory fees vary widely. While cost is a factor, prioritize the advisor’s experience and fit for your needs over fee savings. Often, experienced advisors deliver a better final sale price that justifies their cost.

According to the Boston Consulting Group, companies that work with experienced M&A advisors are more likely to achieve successful transactions, making the investment worthwhile.

Regulatory considerations in M&A advisory

M&A transactions are subject to regulatory oversight concerning disclosure, confidentiality, and fiduciary responsibility. Unlike investment banking, which often deals with public disclosures, M&A advisory must navigate specific regulatory requirements to protect buyers and sellers.

In the U.S., the Securities and Exchange Commission (SEC) and other regulatory bodies set standards to protect buyers and sellers. Advisors must comply with these regulations, and business owners should verify that their chosen advisor operates with transparency and integrity.

M&A advisory vs investment bank: What is the difference?

M&A advisory firms and investment banks both facilitate business sales and acquisitions, but they serve distinct client needs.

M&A advisors typically work with small to medium-sized businesses, offering personalized support for transactions between $10M and $250M. They focus on buy-side and sell-side advisory, valuation, and buyer outreach, particularly for private companies in niche sectors like tech or ecommerce.

In contrast, investment banks cater to more prominent, often public corporations, providing broader financial services, including securities underwriting, IPOs, and capital raising. While investment banks handle high-value, complex transactions, M&A advisors deliver tailored, hands-on support suited to the unique goals of smaller business owners.

Get M&A advisory to sell your business

Choosing the right M&A firm is among the most impactful decisions when selling or acquiring a business. A trusted advisor can provide the expertise, network, and strategic guidance necessary to achieve your goals, ensuring that you maximize the value of your transaction while minimizing risks.

If you’re a business owner in the tech space ready to sell, consider partnering with Boopos. With a team of seasoned M&A professionals, proprietary data insights, and a dedicated network of buyers and sellers, we offer a personalized approach to help you achieve a successful and profitable transaction.