How to Choose an M&A Advisor: A Seller's Guide
Most sellers interview two or three advisors, pick the one who quoted the highest valuation, and later wish they'd asked different questions. Here's how to actually evaluate your options — and what the right questions are.
Key Takeaways
- ✓Industry specialization matters more than firm size for lower-middle-market deals
- ✓Ask for specific references from closed deals, not just deal tombstones
- ✓Understand the full fee structure before signing an engagement letter
- ✓The right advisor has a relevant buyer network — not just a long list of contacts
In this guide
1The questions that matter most
What deals have you closed in my industry in the past 3 years? Industry experience isn't just about understanding your business — it's about knowing which buyers exist and having relationships with them. An advisor who has closed 5 deals in your sector has a relevant network. One who hasn't may not.
Can I speak with 2-3 sellers you've represented? References matter more than pitch decks. Ask specifically about communication during the process, buyer coverage, and whether the advisor's initial valuation expectation matched the final price.
Who will actually be working on my deal? In larger firms, a senior partner wins the mandate and hands it off to junior staff. Know who will be your day-to-day contact.
2Fee structures to understand
Most M&A advisors charge a combination of a monthly retainer and a success fee.
Retainer: $5,000-$15,000/month is typical for lower-middle-market deals. This covers the advisor's time preparing materials and running the process. It's sometimes credited against the success fee at close.
Success fee: Usually calculated as a percentage of enterprise value on a Lehman or double-Lehman formula. For a $10M deal, expect a success fee in the $300,000-$600,000 range.
Minimum fee: Most advisors have a minimum success fee regardless of deal size, typically $200,000-$300,000.
Be cautious of advisors who charge no retainer — it often means they take on more clients than they can actively manage, working primarily on deals where a close is imminent.
3Red flags to watch for
Valuation inflation. An advisor who tells you your business is worth significantly more than others suggests is either more optimistic about the market or trying to win the mandate with a high number. Ask how they'll get to that valuation specifically.
Vague buyer network. Every advisor says they have 'extensive buyer relationships.' Ask them to name 5-10 specific buyers they'd approach for your business and why.
Long engagement terms with difficult exit. Read the engagement letter carefully. Know how long you're committed and what it costs to terminate if the process isn't going well.
No industry references. If an advisor can't provide references from sellers in your industry or deal size range, that's a meaningful data point.
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