How are mid-market M&A specialists different from business brokers?
Business brokers concentrate on businesses under $1 million and cater to the local retail market. Business brokers are also typically dual agents (i.e. represent both buyers and sellers in the same transaction). While many business brokers are ethical, Dual agency creates an inherent conflict of interest. When it comes to the midmarket transactions, business brokers are typically unaware of the M&A process and work by pricing business at an industry standard multiple of cash flow. The cash flow multiple method ignores the strategic aspects of the business and typically undervalues larger businesses by substantial margin. M&A specialists have substantially different and sophisticated methods to value and market businesses. Very few business owners are aware that most Business brokers are only licensed to do asset sales. M&A intermediaries are typically licensed to do stock and asset sales. If you use an advisor who does not have the proper license in place, your deal could be rescinded
