M&A Advisors near you

Preparation comes first and takes longer than owners expect: normalized financial statements, a defensible addback schedule, customer concentration laid out honestly, contracts checked for change-of-control clauses, and employment and benefit records assembled. A company that reaches the market before this is done will spend the exclusivity period producing documents instead of negotiating.

Then outreach. A short anonymous summary goes to a qualified list, interested parties sign confidentiality agreements and receive the full information memorandum, and initial indications of interest come back. Management meetings follow, then a letter of intent, which typically grants exclusivity and is where the seller's leverage peaks and then begins to decline.

Diligence and documentation occupy the rest. Financial, legal, tax, employment, technology and customer diligence run in parallel with the drafting of the purchase agreement, disclosure schedules and any escrow or earn-out terms. The advisor's job in this phase is to keep the deal moving and to stop the seller from renegotiating against themselves every time a diligence finding lands.

The SEC's Guide to Broker-Dealer Registration defines a broker as any person engaged in the business of effecting transactions in securities for the account of others, and applies a functional test based on what a person does rather than what they call themselves. Among the activities it identifies as potentially requiring registration are finding investors or customers, finding investment banking clients for registered broker-dealers, and finding buyers and sellers of businesses, meaning activities relating to mergers and acquisitions where securities are involved.

The guide flags compensation as a central factor, asking whether pay for participation in the transaction depends on or relates to the outcome or size of the transaction, and it notes that people who participate in important parts of a securities transaction, including solicitation, negotiation or execution, typically qualify as brokers.

Two practical consequences follow. First, a sale structured as an asset purchase may involve no securities at all, while a stock sale plainly does, so the structure changes the analysis. Second, a success fee on a stock sale is exactly the fact pattern the guide describes. Ask any advisor whether they are registered, or which exemption they rely on, and get the answer in writing before signing.

Federal law contains an exemption for merger and acquisition brokers at section 15(b)(13) of the Securities Exchange Act. It applies to a broker effecting securities transactions solely in connection with the transfer of ownership of an eligible privately held company, where the broker reasonably believes that the buyer will control the company and will be directly or indirectly active in its management, for example by electing executive officers, approving the annual budget or serving as an executive.

An eligible privately held company is one with no class of securities registered or required to be registered with the Commission, and which in the fiscal year before the broker is engaged had earnings before interest, taxes, depreciation and amortization of less than 25 million US dollars, or gross revenues of less than 250 million US dollars, or both. Control is presumed where the buyer ends up with the right to vote twenty-five percent or more of a class of voting securities.

The excluded activities are the trap. The exemption is lost if the broker receives, holds, transmits or has custody of the funds or securities being exchanged, provides financing related to the transfer directly or through an affiliate, engages in a transaction involving a shell company other than a business combination related shell company, represents both sides without clear written disclosure and written consent, assembles a group of buyers, works on a transfer to passive buyers, or binds a party to the transaction. A broker barred or suspended from association with a broker or dealer is disqualified outright.

A business broker usually lists smaller owner-operated companies and sells to individual buyers, often as an asset sale. An M&A advisor runs a competitive process for a larger business and negotiates structure as well as price. An investment bank does the same at greater scale with a registered broker-dealer behind it and the ability to work on securities transactions without an exemption question.

Your accountant is not a substitute for any of them, but they are essential alongside. The tax outcome of an asset sale versus a stock sale, the treatment of the purchase price allocation and the after-tax proceeds are the numbers that actually determine whether a deal is good, and those belong to your tax advisor rather than to the person whose fee depends on it closing.