Your M&A deal will likely be one of the most significant transactions your business undertakes. The advisor you choose can mean the difference between capturing hidden value and walking away with a below-market price. Here's what to ask before committing.
Does the Advisor Have Recent Transaction Experience in Your Industry?
Not all M&A advisors are created equal. Someone who closed five deals in software services won't necessarily understand the working capital expectations, customer concentration risks, or EBITDA multiples typical in your sector.
Ask for a client list from the past three years, with deal values and industries. Request references from sellers specifically—not just from their largest clients. A healthcare M&A advisor should be able to discuss the regulatory considerations affecting your practice or clinic. A manufacturing advisor should understand inventory turnover and obsolescence issues unique to your space.
If they hedge or give vague answers, move on. Strong advisors own their track record.
What Fees Are We Actually Talking About?
M&A advisory fees typically run 0.75% to 2% of enterprise value, depending on deal size and complexity. Small deals under $10 million often hit the higher end; mid-market deals ($50–250 million) settle in the 1–1.5% range. Large transactions may negotiate below 1%.
Ask for a detailed fee breakdown upfront:
- Retainer vs. success fee structure: Do they charge a monthly retainer during the advisory period (typically $15,000–$50,000/month depending on complexity), or only a percentage of the final deal value?
- Out-of-pocket expenses: Who covers management presentation materials, data room setup, and travel?
- Milestone triggers: Do fees change based on the valuation achieved or the speed of the exit?
- Tail clauses: Are there holdback fees or earnout-tied compensation?
Transparent advisors provide this in writing before engagement. Expect 90–180 days from initial marketing to signed term sheet for a competently run process.
How Will They Value Your Business—and Is That Realistic?
Your advisor should explain their valuation methodology in plain English. Are they using comparable company analysis (trading multiples of similar public firms), precedent transactions (what similar deals sold for), or discounted cash flow projections?
Red flags include advisors who:
- Lead with a single inflated valuation without caveating assumptions
- Ignore recent industry consolidation or margin compression
- Don't challenge your revenue growth projections
- Assume buyer synergies benefit your selling price (they rarely do)
Ask what EBITDA multiple they're targeting and why. A SaaS company with 40%+ annual recurring revenue retention might fetch 8–12x EBITDA; a traditional B2B services firm might see 4–6x. If their initial valuation is wildly higher than comparable sales, ask what makes your business fundamentally different.
What's Their Buy-Side Relationships and Processes?
A good advisor has relationships with active buyers in your space—private equity firms, strategic acquirers, family offices. They should be able to name 15–25 likely buyers within a month.
Ask:
- How many buy-side connections have they cultivated in your industry?
- Will they run a controlled auction or pursue targeted conversations first?
- How do they handle exclusivity periods? (Typical exclusivity is 60–90 days for one buyer.)
- What's their approach if the first round generates interest but not competitive tension?
Advisors with real relationships rarely need to cast a wide net to the entire market. Quality beats volume.
Who Will Actually Work on Your Deal Day-to-Day?
Partners often pitch the deal but hand off execution. Ask who your daily contact will be and verify they have closing experience, not just market knowledge.
Request to meet the team members who'll handle data room management, buyer communications, and financial model review. If the partner who sold you suddenly disappears during diligence, you've been misled.
How Do They Handle Confidentiality and Teaming?
Your business information will circulate to potential buyers. Ask how they manage confidentiality agreements, which buyers they'll approach, and whether they'll require mutual NDAs before sharing detailed financials.
Also clarify: if your deal doesn't close, can they re-approach those buyers in six months? Or is there a tail period where you're locked out?
Frequently Asked Questions
Q: What timeline should I expect from initial engagement to close? A: Most M&A processes take 4–7 months from advisor engagement to closing. Competitive auctions with multiple bidders can extend to 9+ months; negotiated single-buyer deals may close in 3 months.
Q: Should I use the same advisor for valuation and actual deal execution? A: Yes—continuity matters. A valuation advisor familiar with your business assumptions and buyer expectations is better positioned to negotiate realistic terms during diligence than a fresh advisor brought in later.
Q: What red flags suggest I should avoid an advisor? A: Vague fee structures, no industry-specific recent deals, inability to name 10+ qualified buyers in your space, or reluctance to provide references should all trigger concern.
Ready to find the right M&A advisor for your deal? Mercoly lets you compare and connect with trusted Business Valuation & M&A Advisory providers that match your specific needs.