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Understanding M&A Advisory Firms and the Role of Mergers and Acquisition Advisors

Kison Patel

Kison Patel is the Founder and CEO of DealRoom, a Chicago-based diligence management software that uses Agile principles to innovate and modernize the finance industry. As a former M&A advisor with over a decade of experience, Kison developed DealRoom after seeing first hand a number of deep-seated, industry-wide structural issues and inefficiencies.

CEO and Founder of DealRoom

This post was originally published on March 2021 and has been updated for relevancy on May 2, 2024.

The world of mergers and acquisitions has consultants and advisors on all sides.

These range from investment banks acting as intermediaries on mega mergers, legal firms undertaking due diligence and contractual work, and even change management companies, who play an advisory role in the post merger integration phase.

M&A advisory firms are, by some distance, the most common form of intermediary in this industry. There are thousands of small M&A advisory firms in the United States, all seeking a small percentage of the US$3 trillion deal market.

At DealRoom, we work with many M&A advisors providing them solutions for M&A. Let’s take a closer look at the work that these companies do, and the role that they play in the industry.

What is an M&A advisory firm?

M&A advisory firms are companies dedicated to helping businesses navigate the intricate world of mergers and acquisitions. Their duties mainly include advising buy-side and sell-side companies on their transactions. They provide expertise in evaluating deals, negotiating terms, and handling legal and financial aspects of a deal. 

These firms usually make their money through commission or percentage of the sale transaction. The fee can vary, depending on the type of company and its assessed value. For companies who require consistent advisory services, an M&A advisory firm may also charge a flat retainer fee to secure their services.

The role of an M&A advisory firm and typical M&A advisor tasks

The principal role of an M&A advisory firm is to provide guidance and execute M&A transactions for their clients, whether they are buy-side or sell-side. This includes all types of transactions such as mergers, acquisitions, divestitures, joint ventures, and more.

Typically, the client company contracts the M&A advisory firm at the beginning of their deal process, allowing them to take over, in return for a retainer fee and a success fee - usually a percentage of the total size of the eventual transaction. 

A good M&A advisory firm can offer significant deal value for a business owner, especially for those with little or no prior experience in M&A, by building financial models that satisfy their financial objectives.

They will originate suitable companies, make initial contact with other business owners and corporate development officers to discover the right opportunities, advise on deal structure and company value, and take an active role in the buy-side or sell-side negotiations.

Their network should also afford them deeper insights into the existing deal landscape. 

As the introduction stated, the term “M&A advisory firm” is often used interchangeably with “boutique investment bank.”

The reason for this is because, in addition to their core work on transactions, M&A advisory firms usually help companies with restructuring, capital raising, and other corporate finance-related issues.

In this way, M&A advisory firms can often use their consulting on transactions to open up possibilities in advising on other internal financial matters.

The following list is not exhaustive, but most of these tasks are common to almost all M&A advisory firms.

Note that this work can be conducted by M&A advisors for buy-side and sell-side clients:

  • M&A strategy development
  • Development of marketing materials (teaser, pitch decks, investment memorandums)
  • Buyer and target company valuation
  • Deal sourcing
  • Creating target company longlists and shortlists
  • Approaches to buyers and sellers
  • Conducting Initial approaches and negotiations with third parties
  • Deal closing 
  • Document preparation for deal closing (LOIs and SPAs)
  • Capital raising 
  • Company restructuring
  • Post-merger integration
  • Due diligence assistance

So, what do M&A advisors do?

M&A advisors are professionals who help companies through their M&A transactions. They may work in investment banks, law firms, or even in an M&A advisory firm. These professionals are the ones in the trenches, executing the deal on the client’s behalf.

Why do you need an M&A advisory service or a firm?

So, how does M&A advisory add value for companies? And what is the actual value and benefits an M&A advisor provides to the business?

There are essentially three different ways that M&A advisory services add value for companies:

1. Expertise: Most important of all, M&A advisors are experts in the M&A process - the most complex and costly investments that any company can make. This includes everything from valuations to due diligence. 

The success of the M&A process will, to a large extent, determine the success of the buying company, so it’s important to get right. This is where good M&A advisory adds value.

2. Market knowledge: The directors of any company will feel that they know their industry. But they may not know it as well as they think. 

Large M&A advisors spend millions every year ensuring that they obtain market winning research that includes issues beyond most companies such as the market’s transaction multiples, annual revenue and income of private companies, and more.

3. Industry contacts: Through working continuously on transactions, M&A advisors tend to build up large contact lists. Want to buy a company in the UK? If your M&A advisor has an office in the UK, there’s a good chance that they’ll know somebody that knows somebody that can make a direct link with some of the largest companies in the UK. This door opening capacity saves time and money for the hiring company.

Large M&A advisors spend millions every year ensuring that they obtain market winning research that includes issues beyond most companies such as the market’s transaction multiples, annual revenue and income of private companies, and more.

The difference between M&A advisory firms and investment banks

While both work closely with private equity firms, the principal difference between M&A advisory firms and investment banks is the size of the deals they handle and the specific M&A-centered financial services they provide. 

First, blue chip investment banks such as Goldman Sachs, JP Morgan, and Morgan Stanley routinely advise on billion dollar deals.

The resources involved at the high end of the market mean that it isn’t practical for these financial institutions to look after the middle and lower markets, where deals can amount from anything up to a hundred million dollars.

That’s where M&A advisory firms come in.

Investment banks are also bigger in other ways. M&A advisors tend to have limitations on what they can advise clients, but investment banks have no such limitations.

Investment banks have in-house legal teams, departments dedicated to market analysis, industry experts, and more. This is the kind of service offering which is beyond M&A advisory firms.

In fact, M&A advisors usually cannot help with legal work and an attorney will need to be hired.

How much does an M&A advisory cost?

One detail which we omitted to mention in the section about the differences between M&A advisory firms and investment banks was their cost.

The world-class legal advice and industry research provided by investment banks doesn’t come cheap and usually runs into hundreds of thousands of dollars before a transaction has even been completed.

Success fees for investment banks run into tens of millions of dollars.

By contrast, M&A advisory is usually an adequate price for the lower and middle markets. The intense competition for new mandates means that M&A advisors are often willing to be quite flexible on their fees, sometimes even negotiating success fees only.

Success fees vary but typically amount to 5-10% of the total transaction value. Again, competition in the market means this can be bid down.

How to find a competent M&A advisor or an advisory firm

When looking for an M&A advisory firm, there are a number of things to consider. Are you buying or are you selling? If you are buying, then a firm specializing in your industry would be a good bet. If you are selling, then any firm with experience can help you sell your company. 

The size of your company matters too. If you are a large company hiring a small advisory firm, you will be their priority, but they may not have enough resources to handle your deal. If you are a small company hiring a large advisory firm, then you must understand that you will not be their priority. 

The same thing applies to hiring M&A advisors. If you are doing a complex M&A transaction, do not hire a family lawyer, or family accountants. Hire an M&A expert to ensure a smooth transaction. It makes a ton of difference, and it is definitely worth the extra cost. 

Ultimately, it all comes down to your unique requirements for your transaction. There is so much competition in the M&A advisory space that it pays dividends to talk to a handful before choosing one. Choose the one you are comfortable working with. 

M&A Advisory Regulations

Mergers and acquisitions (M&A) advisory regulations are intricate guidelines that oversee the activities related to advising companies on M&A deals and corporate restructuring. These rules are enforced by regulatory bodies to ensure fairness, transparency, and integrity in these complex financial transactions. 

Here are key M&A advisory regulations that should put your mind at ease when hiring M&A advisors. 

  1. Clear information disclosure - Advisors must disclose all the necessary details of the M&A transaction to all the parties involved. That includes explaining the financial specifics of the M&A transaction, and potential conflicts of interest.
  2. Due diligence - Extensive research is imperative for M&A advisors. This is vital, especially when originating deals tied to the goal of creating synergies and increasing shareholder value. Understanding the financial situation, liabilities, and risks associated with the companies involved in the M&A transaction is a high priority. 
  3. Licensing and registration - M&A advisors or advisory firms must meet certain standards to operate legally. They must be officially licensed or registered with the appropriate financial regulatory authority, such as the Securities and Exchange Commission (SEC) in the U.S.
  4. Confidentiality and privacy - M&A advisors must ensure that no sensitive details about the companies or the M&A deal taking place must be leaked or misused.
  5. Ethical standards - Advisors must avoid unethical actions like using confidential information for trading or manipulating market prices, or other deceptive practices. They are expected and are required to follow strict ethical rules.
  6. Compliance with Antitrust Laws - Competition laws are designed to address the impact of an M&A deal on the broader market. M&A advisors must ensure that companies comply with these laws to preserve fair competition.
  7. Cross-border considerations - M&A advisors must prepare for varying laws and regulations in cross-border transactions and ensure to comply with the laws of each country involved accordingly.

Regulatory bodies can impose fines and penalties if M&A advisors don’t follow these rules. The sanctions can go as far as license suspension or revocation, and even criminal charges in cases where fraud or other illegal activities are involved. Beyond legal consequences, violating these regulations can lead one to reputational harm. 

So, when choosing an M&A advisory service, also take into consideration firms that have a good track record of following these guidelines. 


M&A advisory firms and advisors are a great service for anyone new to M&A. They will handle most of the work from start to finish, while helping the client maximize the value of their transaction. 

Just choose your partners wisely depending on your specific needs. You can significantly improve your company’s M&A lifecycle by hiring a good M&A advisor who can help you identify opportunities and risks that might have otherwise gone unnoticed.


Contact M&A Science to learn more

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