Which M&A advisor for your deal: bank, boutique or independent
You are selling your company, or buying one, and you are looking for an advisor. Four kinds of advisors use the same name. They do not sell the same thing, are not paid the same way, and do not suit the same deals. Here is how to tell them apart, and the questions that decide.
One name, four trades
- The investment bank - M&A teams of large banks and leading independent investment banks. It sells a process at scale: dozens of buyers, in France and abroad, competing on one timetable. Paid a retainer and a success fee, it mostly works on deals worth several tens of millions of euros.
- The M&A boutique - an independent team of a few people to a few dozen, often specialised in one sector. The same model as the bank, on a smaller scale: a retainer, then a few percent of the price on success, often with a minimum. Its strength: a sector buyer network and experience of mid-sized deals.
- The independent advisor - a former investment banker, alone or with one partner, who personally does the work a bank team does, from analyst to partner. Paid a fixed fee, a day rate or a success fee, depending on the case. Strength: the senior does the work; limit: a narrower buyer network.
- The fractional M&A manager - an independent advisor who works inside your team rather than across the table, on a fixed monthly fee, running the M&A function of a finance team or a portfolio company, deal after deal. Fractional M&A manager →
Three questions before you choose
Who has to find the buyer, or the target? If your buyers are many and unknown to you, the network of a bank or a boutique is worth its fee: the competition it creates sets the price.
If your natural buyers are three or four, a competitor, a client, a partner, you are no longer paying for a network. You are paying for organisation and documents.
How is the advisor paid? On success, the advisor is paid if the deal happens: the first interest is that it happens. On a €10m price and a 3% fee, €500,000 more on the price earns the advisor €15,000. If the deal does not happen, the €300,000 fee is not paid.
On a fixed fee, the advisor is paid for the work, whatever the outcome. One question separates the two: “what happens if I decide not to sell?”
Who will do the work? In a bank, a team writes the document; the partner leads it and negotiates. Ask who will write it, and who will sit at the table.
Which advisor, for which deal
- You are selling a company worth several tens of millions, to many or foreign buyers - an investment bank or a leading boutique: broad competition pays for their fees.
- You are selling a mid-sized company and know some of your buyers - a sector boutique if you want to widen the circle; a fixed-fee advisor if your natural buyers are already there.
- You already have a buyer, and an offer - an advisor for valuation, documents and negotiation; you do not pay for a network.
- You buy one or more companies a year - a fractional M&A manager for the function; an investment bank for the deal that needs a network or financing to structure.
- You run a portfolio company with a buy-and-build plan - a fractional M&A manager inside the company, reporting to the fund.
What each costs, in orders of magnitude
The bank and the boutique charge a retainer at signing, then a success fee: a percentage of the price, paid at closing.
The rate falls as size rises. In France, below €5m of price, it is often between 3% and 10%, with a minimum.
A fixed-fee advisor charges per deliverable or per month, set in the quote according to scope; for a company sold for around €1m, in the order of €20,000 to €30,000 for a full process.
Check the basis of the success fee too: equity price or enterprise value, earn-out included or not. Enterprise value includes net debt: with €2m of net debt and a 4% rate, the gap is €80,000 on the same deal.
Six questions to ask
- Who will do the work? - the name of whoever writes the information memorandum, and of whoever sits at the negotiating table.
- What happens if I do not sell? - what you will have paid, and for what.
- What is the success fee based on? - equity price or enterprise value, earn-out included or not, minimum fee.
- What does exclusivity cover, and for how long? - and is the fee due on a buyer you bring yourself?
- What happens after the mandate ends? - the tail clause that keeps the fee due on buyers introduced during the mandate, and its length.
- Which comparable deals? - same size, same sector, with the name of a founder or CFO to call.
What JMP Advisory does, and what it does not
I am an independent, fixed-fee M&A advisor and fractional M&A manager in Paris, trained in deal execution at Stifel and Edmond de Rothschild. I work on my clients’ side of the table.
Three situations: founders of mid-sized companies selling to buyers they partly know, finance teams and portfolio companies that acquire, investment banks that need extra execution capacity.
For the international sale of a company worth several hundred million euros, an investment bank is the right choice. I can then support you during its process, on your side.
Four questions about choosing an advisor
Will an investment bank advise a small or mid-sized company?
Large banks mostly work on deals worth several tens of millions of euros. Below that, specialised boutiques take over, with the same success-fee model and often a minimum fee; a fixed-fee advisor is the other route when the buyers are already known.
What is an independent M&A advisor?
An advisor who belongs neither to a bank nor to an audit network, often a former investment banker, and who does the work personally: valuation, information memorandum, process, negotiation. The advisor may be paid a fixed fee, a day rate or a success fee: ask first.
Do I need an M&A advisor if I already have a buyer?
Yes, for what the buyer will not do for you: a defensible valuation, adjustments that will survive due diligence, a letter of intent read clause by clause and a prepared negotiation. You do not need a network; a fixed fee is enough.
How should I compare two fee proposals?
Convert them into euros on the same sale price, including the retainer, the minimum fee and the basis of the success fee; then compare what each costs you if you decide not to sell.
Hesitating between advisors?
Describe your deal: within 24 hours, I will tell you which kind of advisor makes sense, and why.