Ep.#5 [THEME FIVE]

What is a fair price to pay if you want to hire an investment banker/broker to sell your company? What value and services should you expect in return for the price you pay?

In the middle and lower private markets, these questions have traditionally been very opaque. Typically, entrepreneurs have to find answers to these questions by meeting with multiple advisors, talking to their network, and discussing the topic in their peer groups.

Today on the show, Peter Lehrman, the Founder of Axial, the M&A and capital raising platform for the middle market, is back on to help us shine light into this cloudy area of the M&A market by reviewing the results of the Axial’s 2021/22 M&A Fee Guide.

Axial and Firmex just released the results of an online survey that was completed by 269 middle market professionals from July through September 2021. Three-quarters of them work as investment bankers or merger advisors, and another ten percent call themselves business brokers. Many of them are leaders at their firms.

You might be asking, why is this important?

If you are like many business owners, when you think of hiring a banker/broker, you think of the direct cost that will be taken out of the transaction. However, this hire is almost essential. Doing all the paperwork and organization while selling a company is not just a night and weekend job. If done correctly, an intermediary can provide invaluable advice, experience, and resources to the sale process of a company. They should pay for their fees and more. On today’s show, Ryan and Peter Lehrman not only review the survey’s results, they talk about how to find, negotiate, and engage with an investment banker or broker.

// WATCH THE INTERVIEW ON YOUTUBE: Intentional Growth™ Podcast 

What You Will Learn

• Key insights on M&A advisory fees in the middle market.
• The different types of M&A advisors and how to understand the differences.
• The variety of ways M&A advisors structure their fees and engagements.
• Why it’s important to understand the number of companies a firm typically sells a year.
• What a firm’s deal flow, the number of active engagements, and the size of the firm mean to you.
• The different ways upfront fees work and what you should expect from the engagement.
• How the transaction fee is determined, the range of percentages advisors charge, and what may or may not be negotiable.
• Why extremely high upfront fees can be a huge red flag and what to do about it.
• What the negotiables are when looking to hire an M&A advisor.