M&A advisor vs investment banker vs business broker: who does what, who pays them, and which one you need

This guide is for an owner who wants to sell and is being pitched by three kinds of people, and for anyone thinking of becoming one of them. The titles overlap, the fees differ, and the law behind each is not the same. By the end you will know what each one does, how they are paid, and where a licence or FINRA registration comes in. Moran Pober has spent over ten years advising buyers and sellers of small and mid-sized businesses. This is the explanation he gives owners on the first call.

The three roles in one paragraph each

A business broker sells small, owner-run businesses. They list the business on marketplaces, screen buyers, negotiate and hold the deal together to closing. The seller pays a commission when it closes. Most buyers are individuals who will run the business themselves.

An M&A advisor works on bigger private companies, where the buyer is more often another company, a private equity group or a roll-up. They run a targeted sale to a list of likely buyers, or they work for a buyer and find targets. They charge a retainer plus a success fee.

An investment banker works at a firm that is registered as a broker-dealer. They run formal sell-side processes for larger companies, raise debt and equity, and advise on public offerings. Their fees are the largest in dollars, and their minimum deal size is the highest. For a Main Street business they are the wrong call.

Deal size: Main Street, lower middle market, middle market

The industry draws the line at $2 million. The IBBA and M&A Source Market Pulse survey is run with Pepperdine University. It defines Main Street as businesses valued under $2 million, and the lower middle market as $2 million to $50 million, as the Pepperdine report notes. Above that is the middle market, where investment banks do most of their work. There is no legal definition of "middle market"; firms and surveys use different cut-offs.

In practice:

• Under $2 million: a business broker. Buyers are individuals, often with an SBA loan.
• $2 million to $50 million: an M&A advisor, a boutique investment bank, or a larger brokerage with an M&A arm. Buyers are companies, private equity and roll-ups as well as wealthy individuals.
• Above $50 million: an investment bank. The process is formal and the buyer list is long.

These are habits, not rules. A $4 million HVAC company might be sold well by a specialist broker.

Who they work for

A business broker almost always represents the seller. The listing agreement is with the owner, and the commission comes out of the sale price. A buyer should remember that the broker's client is on the other side of the table.

An M&A advisor can work either side. Sell-side advisors take a company to market. Buy-side advisors, which is what we do at Acquisitions.com, are paid by the buyer to find deals, make offers and bring in lenders and investors.

An investment banker also works either side. On large deals it is most often the seller, the company raising money, or a board that needs a fairness opinion. Representing both sides in one deal needs written disclosure and consent from both. The SEC's 2014 letter and the 2023 exemption below both say so.

Licences and registration: the part people get wrong

Three layers of law apply, and which ones bite depends on the deal.

State business-broker rules. There is no national business broker licence. Some states treat selling a business as real estate brokerage. California's Section 10131 defines a real estate broker to include anyone who, for a fee, negotiates "the purchase, sale, or exchange of real property or a business opportunity". Florida's Statute 475.01 defines "broker" to cover "the sale, exchange, purchase, or rental of business enterprises or business opportunities". In both states you need a real estate licence. Other states have their own rules or none; our guide to becoming a business broker goes state by state.

Federal securities law. When a company is sold by selling its shares, those shares are securities. The SEC's Guide to Broker-Dealer Registration defines a broker as "any person engaged in the business of effecting transactions in securities for the account of others". It names "finders" and "business brokers" among those who may need to register. FINRA says all broker-dealers that sell securities to the public in the U.S. must be registered with the SEC and be FINRA members. That is why investment bankers sit inside broker-dealers. Their deal staff pass FINRA's Series 79 exam, which FINRA says covers advising on securities offerings and on mergers and acquisitions.

Two carve-outs for M&A brokers. The first is the SEC's M&A Brokers no-action letter of January 31, 2014, revised February 4, 2014. In it the Division of Trading and Markets said it would not recommend enforcement against an "M&A Broker" who helps sell a privately held operating company without registering, under ten conditions. Then Congress wrote a version into law. Section 15(b)(13) of the Securities Exchange Act, effective March 29, 2023, exempts M&A brokers from SEC broker-dealer registration, as law firm Sidley explains in its summary of the exemption.

The 2023 exemption's main conditions, as the statute and Sidley state them:

• The company is privately held, with no securities registered under Section 12 or reporting under Section 15(d).
• In the fiscal year before the broker is engaged, the company had EBITDA under $25 million or gross revenues under $250 million.
• The broker reasonably believes the buyer will control the company, or be active in its management, after closing. Control is presumed at 25% or more of a voting class.
• The broker never receives, holds or has custody of the parties' funds or securities.
• The broker does not provide the financing, and discloses in writing any pay for helping arrange third-party financing.
• No shell companies (other than a business-combination shell), no public offerings, no passive buyers, no buyer groups the broker formed, and no binding a party to the deal.
• Nobody at the firm has been barred or suspended from association with a broker-dealer.

Two warnings. The federal exemption does not remove state law: Sidley notes it "provides no protection from the broker-dealer registration requirements of the individual states". And the 2014 letter had no size limit, while the 2023 statute does. None of this is legal advice. Before anyone earns a fee on a stock sale, a securities attorney should confirm what registration that deal needs.

How each one is paid

Business brokers are paid a commission at closing, as a percentage of the price, usually with a minimum fee. BizBen's September 2025 survey of broker fees puts the commission at a flat 10% on businesses with revenue up to $500,000, and 8% to 10% between $500,000 and $1 million. Minimum fees across that range run from $10,000 to $25,000.

M&A advisors charge a retainer and a success fee. The success fee usually follows a sliding scale. The original Lehman formula is 5% of the first $1 million, 4% of the second, 3% of the third, 2% of the fourth and 1% above that. Double Lehman doubles each step: 10%, 8%, 6%, 4%, 2%, as Exit Promise lays out in its Lehman scale explainer. A "modified Lehman", in Exit Promise's description, charges 2% of the first $10 million and a smaller percentage above. BizBen reports that between $1 million and $50 million, retainers of $35,000 to $50,000 as a minimum engagement fee are common.

Investment bankers also charge retainers and success fees, often with a large minimum fee, plus separate fees for a fairness opinion or a financing. The numbers vary too much by firm and deal to quote here.

Worked example, from the Exit Promise scale. A $5 million sale under Double Lehman costs $100,000 + $80,000 + $60,000 + $40,000 + $20,000. That is $300,000, or 6% of the price. The same sale at a 10% Main Street commission would cost $500,000. That gap is one reason owners above $2 million shop for an M&A advisor rather than a broker.

The comparison table

Which one you should hire

Start with three questions.

1. How big is the business? Under $2 million in value, a broker. Between $2 million and $50 million, an M&A advisor or a boutique bank. Above that, a bank.
2. Who will buy it? If the likely buyer is a person with an SBA loan, a broker knows that buyer. If it is a competitor, a private equity group or a roll-up, you want someone with those relationships.
3. Is it a stock sale? Most small deals are asset sales, and the securities rules do not apply. A stock sale is a securities transaction. Then the question is whether your intermediary fits the M&A broker exemption or must be a broker-dealer. Ask them, and have your attorney check the answer.

Then ask for references from deals like yours, and read the engagement letter before you sign it. The retainer, the minimum fee, the tail period and who pays if the deal dies are the lines that matter.

Where Acquisitions.com fits

Acquisitions.com is an advisory firm, not a broker-dealer or a lender. We advise buyers and owners and introduce them to third-party lenders and investors. We do not sell securities. If you are an owner, our guide to selling a business covers how a sale runs; you can also book a free first call with us.

If you want to become one of these three, the broker route is in our business broker guide above. The advisory route is in how to become a business advisor. Advisors who want deal flow, AI tools and marketing support can work under the Acquisitions.com name through the advisor program. Tim Whipple, one of our advisors, is a Certified M&A Advisor and a member of both the IBBA and AM&AA. That pairing is common for someone who works both Main Street and lower-middle-market deals.