An M&A intermediary provides a number of services related to middle market deal making such as acquisitions, divestitures and financings. In some instances, lawyers, CPAs and financial consultants can also act as an M&A intermediary.
An M&A intermediary refers primarily to practitioners that provide advice on transactions in the lower middle market between $5 million and $100 million. The ability to raise capital and deal complexity distinguishes an M&A intermediary from a private or public investment banker. An M&A intermediary is generally not active in raising equity or private placements and have less experience with more complex transactions such as MBOs, recapitalizations, reverse mergers, tender offers and IPOs.
A business owner must assess the skills and experience of the professionals they are considering hiring when completing an M&A transaction. It is important to consider the following attributes:
- Track record of success – What is their closing ratio?
- Regional focus – Do they have the reach and network to find the best buyers?
- Industry expertise – Do they understand the operations, trends and M&A environment of your industry?
- Transaction size – Are they capable of handling your deal size?
- Transaction type – Do they have the intricate knowledge of your deal complexities (i.e. MBO, reverse merger or IPO)?
Based on the above assessment, an owner may determine that a private or public investment banker is better equipped than an M&A intermediary to complete the deal.