Selling a Business

Broker, Banker, or Direct

Decide who takes your company to market by understanding what each intermediary actually does, what they are paid for, and the specific clauses in their engagement letter that will cost you money after the deal closes.

  • Advanced
  • 9 min total
  • 12 chapters

What decision this helps you make: Whether to engage a business broker, a mergers and acquisitions adviser or investment bank, or run the process yourself, and how to negotiate the engagement letter if you engage anyone.

What this topic is

A comparison of the three routes to market for a private company sale: the main-street business broker, the lower-middle-market M&A adviser or investment bank, and the direct or self-run process. It covers what each actually produces, the fee architectures involved, the engagement letter terms that matter most, and the regulatory framework that determines who may lawfully be paid for this work.

Why it matters

The intermediary decision determines who your buyers are, how many of them there are, how much of the process you personally run, and how much of the price you keep. Fee differences of two to four percentage points are visible and comparatively easy to negotiate. The invisible terms routinely cost more than the headline rate: tail periods, exclusivity, the definition of transaction value, expense provisions, and what counts as a covered buyer.

Who should learn it

Owners preparing to launch a process, and anyone about to sign an engagement letter with a broker, adviser, or bank.

What you will understand

  • What each intermediary type actually does, and which deal sizes each serves
  • The main fee architectures, including retainers, Lehman and double-Lehman scales, and success-fee tiers
  • The six engagement letter clauses that most often produce disputes after closing
  • How the M&A broker registration exemption works and why it matters to who you may hire

Prerequisites

Common misconception

"I will save the fee by selling it myself." Sometimes true, usually not, and almost never for the reason owners think. The value an intermediary adds is not paperwork. It is the number of credible competing buyers at the table, and the fact that someone other than you can push on price without damaging a relationship you will need if the deal survives. A single-buyer process run by the owner typically costs more than the fee in price, structure, and time, but a well-run direct process to a known strategic buyer can genuinely be the right answer.