Business Brokers vs M&A Advisors:
The Ultimate Comparison
Don't Bring a Broker to an M&A Deal.
The biggest mistake business owners make is misidentifying their transaction size. Are you selling a "job" or a "business"? The answer dictates who you hire.
License & CredentialS
CA BRE# 01861204
M&AMI
Master Intermediary
LCBB
Lifetime Broker
CM&AP
M&A Professional
CABB
CA Assoc. Bus. Brokers
M&A Source
Global Association
Business Broker
Main Street
Best for local businesses where the buyer is likely an individual looking to replace their income.
Deal Size
Under $2M Revenue
Valuation Method
SDE (Seller's Discretionary Earnings). Multiples of 1x - 3x.
Approach
"Listing" Model. Uses sites like BizBuySell. Passive marketing.
Regulation
A state real estate license is often required.
Typical Fee Structure:
Primarily Commission Only (Success Fee). Usually 10-12% of final sale price.
M&A Advisor
Middle Market
Designed for companies with management teams and strategic value. The buyer is an institution, competitor, or PE Group.
Deal Size
$2M - $100M+ Revenue (Lower Middle Market & up)
Valuation Method
Adjusted EBITDA. Multiples of 4x - 10x+. Focus on IP and scale..
Approach
"Auction" Model. Private blind outreach to 100+ vetted buyers.
Regulation
SEC/FINRA oversight (Series 79) or M&A Broker Exemption (HR 2617).x Amortization of Goodwill. In California, a real estate license is required.
Typical Fee Structure:
Paid Valuation (Consulting) + Lehman Scale Success Fee. Incentivizes maximizing value.
Why Do M&A Advisors Charge For Business Valuation?
The "Commission-Only" trap vs. Strategic Investment.
The Passive "Listing" Approach
Business Brokers typically operate on a Success Fee only (Commission). Because they aren't paid until a sale happens, they must minimize the time spent on each client.
- Relies on public websites (BizBuySell).
- Generic "blind" ads.
- Waiting for buyers to come to them.
The Active "Auction" Approach
M&A Advisors charge a business valuation and assessment Fee. This upfront investment funds a team of analysts to prepare your business before going to market.
- Creating a 50+ page Confidential Information Memorandum (CIM).
- Building a bespoke list of 200+ strategic buyers.
- Setting up a secure Virtual Data Room (VDR).
- Result: Multiple bids drive the price up, often covering the retainer 5x over.
Comparison Matrix: Business Broker vs. M&A Advisor
Self-Assessment: Which do you need?
| Factor | Business Broker | M&A Advisor |
|---|---|---|
| Your Revenue | Under $2 Million | $2 Million - $100 Million |
| Your Buyer | Individuals / Local | Strategic / Private Equity |
| Company Structure | Owner-Operator (Job) | Management Team (Platform) |
| Confidentiality | Difficult (Public Listings) | Strict (Blind Outreach) |
| Deal Complexity | Asset Sale / Simple | Stock Sale / Rollover Equity / Earnouts |
*Note: The $2M - $25M range is often called the "Lower Middle Market." Depending on complexity, either professional may work, but M&A Advisors typically yield higher multiples.
Still Unsure?
Let's Run the Numbers.
The most expensive thing a business owner will ever "buy" is a free valuation
California Specific Warning
DRE Licensing Enforcement
To value and sell a business in CA, the firm must hold a California Department of Real Estate license. Unlicensed out-of-state "free" tools are illegal in CA.
Board Compliance (CSLB/BAR/ABC)
Free estimates ignore California's complex licensing clearances. Buying a construction or auto repair shop without CSLB/BAR clearance can trigger immediate legal failure.
Negotiate from Strength, Not Guesswork.
"If your business is in California, an out-of-state free business valuation is the fastest way to lose millions in structural errors. We live and breathe CA M&A."
Specialization Matters
Rogerson Business Services handles the Lower Middle Market (Gross Revenue $2M–$100M) with a track record of closing complex transactions across multiple CA sectors.
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For serious business owners ready to exit.
All reports are signed by a licensed principal.
