Thinking about selling your landscaping business? Who, if anyone, should you get to help you with that Big Project? Have you heard the term business broker or M & A firm and wondered if there is a difference?
Folks, I worked as a corporate buyer creating an NYSE listed company for over ten years and I didn’t know the difference until recently!
Business broker/business advisor
Business brokers work with companies at the “smaller” end of the market – total price of $1-3 million (sometimes up to $5 million, depends on the company). This is the “enterprise value” or the gross sales price—not the annual revenue. Business brokers, in the best case, are members of professional organizations, well-educated and very experienced in working with small businesses. Many have owned their own businesses and decided to help others sell. It takes a unique mix of people skills, business knowledge, project management and deal-making skills to get deals closed in an effective manner. In many cases, business brokers “list” a business (similar to real estate and, in some states, requiring a Real Estate Brokers’ license). When you see businesses listed on BizBuySell or other websites, you will be dealing with a business broker. Fees are usually lowest, and levels of service will vary.
M&A firms are usually working with the next tier of sellers and buyers, usually privately held, but more sophisticated and larger in scope. They will work with Private Equity firms and Family Offices among others. The deal team will consist of senior executives with supporting “back offices” of financial analysts and other support staff. Team members will often be individuals who left investment banking firms to be closer to the action themselves. Clients of M&A firms are usually working with more sophisticated deal structures and financing. Fees usually are monthly (to cover their additional levels of overhead) plus success fees.
At the top of the food chain are investment bankers. Our industry is probably not too probably attractive to this group right now due to the fragmented nature and low barriers to entry. (No entity worth more than 2% of the total—and that’s only one that’s public).
As always, if you would like to discuss this topic, your business valuation, your value drivers, buying or selling, feel free to reach out to me at 224-688-8838 or email me [email protected].