M&A advisory services is a phrase that covers everything from a two page teaser to a full auction. Before signing anything, a seller should be able to say what is inside the fee and what will be billed by somebody else, because the second list is usually longer than expected.
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Inside the scope
Normalising the earnings and agreeing add backs, writing the information document and teaser, building and approaching the buyer list, managing offers to a deadline, coordinating diligence and holding the buyer to the timetable through to closing. Some firms include a valuation exercise; others treat that as separate work.
Billed by somebody else
Legal drafting and negotiation of the purchase agreement and disclosure schedules. Accounting and tax advice on the structure, including any quality of earnings work a buyer requires. A data room subscription if the firm does not provide one. These are real costs and they arrive at the same time as the success fee.
What to pin down before signing
Whether the retainer is credited against the success fee. Whether marketing costs are extra. Who pays for a vendor diligence report if one is prepared. And what happens to the fee if the deal completes at a lower price than the letter of intent, which is common enough to be worth a sentence in the engagement letter.
Questions people ask about M&A advisory services
Does M&A advisory include a valuation?
Sometimes an opinion of value for guidance, which is not a formal appraisal. Where you need a defensible valuation for tax or a dispute, that is separate specialist work.
Is a data room included?
It varies. Ask, because the subscription is a real cost and some firms pass it through.
What if I already have a buyer?
Some firms will run a reduced scope engagement at a lower fee to negotiate and manage diligence with a buyer you found. It is worth asking for explicitly rather than paying a full process fee.