The Hidden Value of an M&A Advisor: Why Going For It Alone Can Cost You More Than You Think

When it comes to selling a middle-market business, owners often face a critical decision: Should they hire an M&A advisor or attempt to sell the business themselves? While some may be tempted to save on advisory fees by taking a do-it-yourself approach, multiple studies have shown that engaging a professional M&A advisor significantly increases the final sale price, often by 25% or more. 

The Numbers Don't Lie: M&A Advisors Deliver Higher Valuations

A comprehensive study conducted by the University of Alabama and Portland State University analyzed 4,468 private company transactions over 20 years. The findings were clear: sellers who used an M&A advisor achieved a valuation premium of approximately 25% compared to those who sold their businesses independently. Similarly, Northern Trust’s Business Advisory Services group analyzed 4,316 transactions and found that businesses represented by an advisor received EBITDA multiples that were 1.5 times higher than those who opted for a for-sale-by-owner (FSBO) approach.

For middle-market business owners, these statistics underscore a crucial point: selling a business is not like selling a home or a small asset. It requires specialized knowledge, strategic positioning, and extensive buyer access—areas where an experienced M&A advisor provides significant advantages.

Access to the Right Buyers at the Right Price

One of the biggest mistakes business owners make when selling on their own is limiting their pool of potential buyers. A professional M&A advisor has access to an extensive and well-curated buyer network, ranging from strategic acquirers to private equity firms, family offices, and international investors.

At IT ExchangeNet, we leverage our proprietary database of over 85,000 global buyers, ensuring each business we represent attracts the right kind of attention. This targeted approach creates competitive tension, which often leads to better terms and higher valuations.

In contrast, business owners who try to manage the process themselves often engage with a handful of potential buyers, reducing competition and weakening their negotiating position. Without multiple offers on the table, sellers may find themselves settling for a suboptimal deal.

Expertise in Deal Structuring and Negotiation

M&A transactions are complex, with numerous financial, legal, and operational considerations that impact valuation and deal terms. An experienced M&A advisor understands how to structure transactions to maximize value while minimizing risk. This includes negotiating the optimal mix of cash, earnouts, seller notes, and equity rollovers to align with the seller’s financial goals.

Additionally, M&A advisors bring deep experience in negotiating with sophisticated buyers who have teams of lawyers, accountants, and investment professionals working on their behalf. Without expert representation, business owners can find themselves at a serious disadvantage, potentially leaving millions of dollars on the table.

Managing the Process and Avoiding Pitfalls

Selling a business is not just about finding a buyer; it involves managing due diligence, legal documentation, financial disclosures, and regulatory approvals. This process can take several months, and without the right expertise, deals can easily fall apart at any stage.

An M&A advisor acts as a quarterback, managing the entire process to keep things on track. From preparing a compelling Confidential Information Memorandum (CIM) to coordinating due diligence and securing financing, advisors ensure that every detail is handled professionally.

More importantly, an advisor allows business owners to remain focused on running their company during the sale process. One of the biggest risks of FSBO transactions is that the owner gets so consumed by the sale that business performance declines, potentially reducing valuation or even derailing the deal altogether.

Mitigating Risk and Avoiding Post-Sale Regret

Beyond the financial upside, hiring an M&A advisor also mitigates risk. Legal and financial missteps during a transaction can lead to costly litigation or earn-out disputes post-sale. Advisors help structure deals to ensure clarity in representations, warranties, and indemnifications, protecting the seller from unforeseen liabilities.

Furthermore, an advisor provides an objective, data-driven perspective that helps business owners make rational decisions rather than emotional ones. Many FSBO sellers undervalue their businesses or accept the first reasonable offer that comes along, later regretting the decision when they realize they could have secured a much better deal with professional guidance.

The Cost of an Advisor vs. The Cost of a Bad Deal

Some business owners hesitate to hire an M&A advisor due to the cost of advisory fees, which typically range from 3% to 7% of the transaction value. However, when compared to the additional 25% (or more) in valuation premium that an advisor can secure, the math is clear: the benefits far outweigh the costs.

Consider a business that sells for $10 million. If an advisor can increase the sale price by 25%, that’s an additional $2.5 million. Even after paying a 5% advisory fee ($625,000), the seller walks away with nearly $2 million more than they would have in a FSBO transaction.

Conclusion: Experience Matters in M&A

Selling a business is one of the most important financial transactions an entrepreneur will ever undertake. The data is overwhelming: engaging a professional M&A advisor results in higher valuations, better deal structures, and reduced risk. While it may be tempting to go it alone, the cost of a bad deal—or leaving money on the table—is far greater than the investment in expert advisory services.