Selling a company is a multi-layered process � legally demanding, financially complex, and often emotionally charged. To structure this transaction process in an organized, efficient, and legally secure manner, many entrepreneurs seek professional M&A advisory.
But many ask themselves: What does an M&A advisor cost when selling a company? And when is this investment really worth it?
Compensation models at a glance: What does an M&A advisor charge?
In practice, M&A advisors typically work with a tiered fee structure comprising three components: the so-called retainer (a monthly advance payment), the success fee (a performance-based commission), and possibly additional fees for special services such as due diligence support or international buyer search.
The retainer is usually between �5,000 and �100,000 per month, depending on the scope of the project and the advisor's profile. However, not every M&A advisor requires a retainer � especially very specialized M&A firms or advisory houses. In such cases, the compensation model is often structured solely through the success fee, which reduces the risk for the client.
The success fee is based on the achieved sale price and is often between 2% and up to 17%, particularly for smaller transactions. For large-volume transactions starting at around �100 million, the success fee is proportionally lower in percentage terms but remains high in absolute terms.
Costs and benefits in relation: Is an M&A advisor worth it?
The costs for M&A advisory may appear substantial at first glance. In practice, however, the investment often pays for itself many times over. A competent M&A advisor brings additional buyers into play, positions the company strategically, improves the deal structure, and maximizes the net sale proceeds.
Tax optimization, liability limitation, or a clever earn-out structure can be financially decisive. M&A advisors who have accompanied many transactions recognize optimization opportunities early and provide impulses regarding the choice of legal form, holding periods, or structuring of disposal proceeds � always in coordination with tax consultants and lawyers.
Why retainers are common in early phases
Especially in the early phase � during company analysis, document preparation, market positioning, and buyer outreach � the retainer is common. In the mid to large-cap segment starting at around �50 million enterprise value, it also serves to secure the high resource expenditure in the first months.
In this phase, the advisor develops individual marketing strategies, engages specialists, and lays the foundation for a successful bidding process.
Large investment banks vs. specialized M&A boutiques
Depending on the size and complexity of the transaction, the appropriate contact persons vary:
Investment banks
For cross-border transactions with volumes over �100 million, large investment banks offer global buyer reach and high transaction frequency.
Specialized M&A boutiques
For company values between �5 and �100 million, specialized M&A boutiques are often more suitable. They work closely with clients, are industry-focused, and flexible. Often owner-managed, they offer direct contacts and quick decisions. Many focus on industries such as industrial, healthcare, IT, or consumer goods.
When is an M&A advisor not needed? Practical examples
In certain cases, an M&A advisor can be dispensed with � for example when:
- very small companies (revenue under �200,000)
- time-critical distress sales
- family-internal succession solutions
- sales to known business partners
- liquidation processes or sole proprietorships with low intangible assets
Even in such cases, caution is advised: a lack of expertise can lead to strategic errors that cost more than saved advisor fees.
Disclaimer
This article has been prepared with the utmost care and to the best of our knowledge and belief. Nevertheless, neither the authors nor Adams Strategy GmbH & Co. KG assume any liability for the accuracy, completeness, or timeliness of the information contained herein.
This is general information that cannot replace individual professional advice. In particular, tax, legal, and strategic decisions should always be coordinated with qualified and independent experts. Any liability for damages of a material or immaterial nature arising from the use or non-use of the information provided is excluded.
Note: This article is part of our healthcare industry series. Contact us at valuation@adamsstrategy.de for M&A advisory in the care sector.