If you have a business that generates a significant six figure income and should sell for a few million dollars, you may question whether you should use a business broker or an m&a advisor to sell the business. Here are some ways you can make the choice: Focus less on what the firm calls itself and more on what types, and sizes, of businesses they sell and how they go about doing so. Because m&a advisors and business brokers are not subject to rigorous licensing requirements, check references and look at training and experience.
Generally speaking, an m&a advisor sells businesses that generate at least $1,000,000 in EBITDA (earnings before interest, taxes, depreciation, and amortization) and sell for $5,000,000 or more. They work on a small number of these projects at a time, 
preparing a full report about the business for potential buyers. The m&a advisor then sells these businesses to other businesses or private equity groups whom they have identified. They contact the buyers directly about the opportunity and generally do not advertise the business for sale or market it to many individual buyers. Their pre-sale preparation normally includes a business valuation.
Business brokers generally sell businesses with less than $1,000,000 in EBITDA that sell for less than $5,000,000. Because the businesses sell for less, many of the potential buyers are individuals looking for a business to buy. Business brokers generally advertise the business, confidentially, on the Internet and to a buyer database. Like the m&a advisor, the business broker may prepare a report about the business and contact other businesses and private equity groups directly to market the business to them. The type of valuation report the business broker prepares for the owner can vary and may depend on what type of valuation the owner is willing to pay for.
As a business owner, you need to look at who the potential buyers are for your business. If high net worth individuals could buy it, a business broker who also offers m&a services may be the best choice. You should also look at what size businesses, in revenues, the m&a advisor or business broker sells. You don’t want to be smaller than most of the businesses an m&a advisor is selling because you are probably not going to get enough attention. On the other hand, if a business broker is only selling businesses that sell for much less than your business should sell for, the business broker may not have the experience or offer the additional m&a services you need. However, you should ask if they are marketing businesses that are not being advertised.
If you choose an m&a advisor to market your business, you should expect to pay significant fees when the m&a advisor takes the engagement and while the m&a advisor is marketing the business. The business broker may also charge some upfront fees, but they are generally much less. Both will charge a commission (which may be called a “success fee”) upon the sale of the business. The upfront fees may be deducted from the commission.
In summary, when choosing who to sell your business, look at the education and experience of the m&a advisor or business broker, the services the firm offers compared to what you need, and the references for the firm. The right intermediary can make a big difference in how much you get for your business and how smoothly the entire process goes.
