Making the Transition from Business Brokerage to M&A

Many M&A Source members join the organization after being business brokers. The desire to move upmarket and work on bigger deals is natural and it happens regularly. M&A advisors bridge the gap between small businesses and large corporations, focusing on the lower middle market. I believe that the major factor that determines whether a deal is business brokerage or M&A depends on who is the most logical, highest value buyer. If it is an industry buyer or a PEG, it is an M&A deal.

After selling my business in 2002 I went back to graduate school for an MBA and started a consulting practice. A CPA hired me to consult for a business in which the owner died. I ran the business and then oversaw the sale of the company to an industry buyer. That was all it took to get me hooked. I transitioned from consultant to business broker and ultimately to M&A. If you are new to the industry, here is what I suggest.

First, write a strategic plan that focuses on four major objectives: education, mentorship, networking, and commitment. There is no faster way to taint your reputation than to present yourself as someone qualified to take an M&A engagement when you are not qualified to service your client and the deal with excellence.


Become familiar with more advanced financial concepts. For example, M&A deals are based on multiples in which the appropriate level of working capital is to remain in the business. Understand how target working capital is calculated and be able to explain working capital to your clients – many often do not understand the concept.

Learn to prepare more detailed and intensive offering documents. The cornerstone of an M&A offering is the Confidential Information Memorandum. These are more detailed and complex than the Confidential Business Review used in business brokerage. Find actual CIMs and review them. Create a template that works for you but be prepared to customize it for each deal. Have a system in place to make sure it is formatted properly, written professionally, and contains all the right information. Lastly, have all of your CIMs proofread by another party before you send them to your client for approval. If you are uncertain that you can prepare a superior CIM, outsource it. There are companies out there that will do it for you.

Creativity in M&A deal making can mean the difference between an aborted sale or a closing. Learn about deal structure as it is more complex in the world of M&A. Most M&A deals are comprised of multiple components – notes, contingent payments, change of control issues, HR issues, and more. Some deals (healthcare) are bifurcated – both stock and an asset sale. Most industry or PEG buyers want owners to remain so be conversant in employment agreements. You also need to understand warranties, holdbacks, true-ups, tax implications, and more.

Due diligence is often more complex. Make sure you have the bandwidth to coordinate the gathering of the information in a timely and orderly fashion. Many M&A deals include a quality of earnings. Get familiar with them. They are often opportunities for buyers to renegotiate the deal if your offering documents and your presentation of the financials of the business do not reconcile with due diligence or the Q of E.

M&A Mentorship

Do not go it alone. Find experts and ask them if they would be available to help you as you transition to M&A. Every deal is different, and all deals present unique challenges and roadblocks. Besides having a veteran M&A advisor you can rely on; you should also create relationships with transaction CPAs and attorneys that will take your call and give advice freely. You may be able to reciprocate by sending them clients, but the good ones will often help regardless as no one is hurting for work these days.

Networking for M&A Deals

Business brokerage deals originate from many sources including internet searches, business for sale websites, bankers, and real estate agents. M&A deals typically originate through referrals. People who are familiar with you and your work will recommend you when they know, first-hand or through a trusted source, that you work with honesty, integrity, knowledge, and responsiveness. Leverage the business brokerage deals you have done by asking those advisors to recommend you to larger companies.

Commitment to the M&A Practice

Many people retire from banking or business ownership and then decide they will “dabble” in M&A. That is not how you build a practice and service clients properly. Go all in. Hire help if you need back office and make sure you get all the resources you need to service clients properly. This includes but is not limited to professional conference room access, data rooms, video conferencing capability, conference lines, databases, and subscriptions to industry information.

The M&A Source is an excellent way to get the education and networking you need. Members also receive free and/or discounts on resources. Conferences provide networking opportunities to create relationships. Joining a committee to meet industry veterans and possible mentors. Lastly, have fun! Throughout my business career, I have never enjoyed my work as much as I do in M&A!

kathlene thiel headshoKathlene Thiel, MBA, Certified Business Intermediary, and Certified Valuation Analyst, is the owner of ThielGroup, LLC, located in Albany, New York. After the successful sale of an education company owned for 14 years, Kathy earned an MBA from Clarkson University (formerly Union Graduate College) and started ThielGroup – a business sales, consulting, and valuation company.