Business Sale – Hire a Large M&A Firm or Rather a Small M&A Boutique?

Business Sale – Hire a Large M&A Firm or Rather a Small M&A Boutique?

The Business Sale: Not an End, but a Transition

It is a final step for most entrepreneurs in their career: the business sale. Yet this important step is often seen as the end of a company's story, as a last act — when in fact it is another step in the development of a business. A decisive step that gives employees and customers new perspectives and allows the company to live on beyond one's own working life.

Often this development begins at the 60th birthday. The sixth decade. Now it has arrived. "Just five more years … that would be a good retirement age. But then again: did I really take on that enormous risk just to have to work until retirement?" many ask themselves. And most answer their own question with: "Maybe it's time to start looking around."

Where Does the Business Sale Begin?

But where does one begin the path of a business sale? How does one actually sell one's own company? How do I know what my company is worth? And above all: who will pay me the price I want for my company?

Questions that are not so easy to answer when you have spent most of your life dealing with operational or hands-on matters.

Why M&A Advisors Are Important

The answer is actually quite simple — answered with a counter-question: If you have a legal case, who do you turn to? Your lawyer. If your car needs repairing, who do you turn to? A garage. If you have knee problems, who do you turn to? An orthopaedic specialist.

This means: you usually turn to the specialists in the relevant field. In a business sale, these specialists are M&A advisors — also known as succession advisors for business sales.

They know the entire procedure of a business sale in detail. They have the network to potential buyers. They often serve as a sounding board and a firewall between you and the buyer. Good sell-side M&A advisors represent your interests as if it were their own company.

In their information memoranda they analyse the most important unique selling points, competitive advantages and identify lost EBITDA. They draft business plans and accompany the Letter of Intent negotiations, which ultimately lead to the purchase agreement.

Large M&A Consultancy or M&A Boutique?

What Is a Large M&A Consultancy?

Large M&A consultancies are companies with several thousand advisors worldwide. They frequently advise corporations or larger companies above a certain revenue size. In addition to pure M&A transaction advisory, they often offer further services for the buyer side — such as Financial Due Diligence (FDD), Legal Due Diligence (LDD), and in some cases Post-Merger Integration.

Their advantages: international networking, deep industry experience and large internal resources. In their working style they often resemble "generalists".

What Is an M&A Boutique?

M&A boutiques, on the other hand, are usually smaller, specialised advisory firms (<50 employees). In most cases they have a clear industry focus and — with regard to German M&A boutiques — are active in the DACH region, with projects that also extend to the EU area.

Their advantage: a close network of strategic buyers in specific focus industries as well as detailed knowledge of industry-typical multiples and deal structures. M&A boutiques also score points with leaner processes and specialised teams, which often leads to more attractive pricing models. They resemble individual "specialists".

Which Advisory Firm Suits My Company?

Ultimately, it is not possible to say in general terms which path is the right one — because depending on the situation there are different requirements and objectives. If you are selling a company with several international branches and complex know-how across different legal systems, a globally positioned large consultancy with worldwide offices may be the right choice — corporations advising corporations.

But even corporations deliberately turn to M&A boutiques when it comes to deep industry understanding and tailor-made analyses — and to receive high-quality, detailed information memoranda.

There is rarely a simple "all or nothing" — as is usually the case in life. In the end, what matters is not the size of the advisory firm, but whether it fits the next step in your company's story.