Small advisory firms win mandates on the promise that the senior person you meet is the person who does the work. That promise is frequently kept and is worth a great deal, because a partner who has done this for twenty years negotiates better than an analyst. The risk is capacity, and it is measurable before you sign.
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What you gain
Attention, continuity and usually a sector relationship set built over years rather than bought as a database. In the sector a small firm covers, its buyer list is often better than a large firm's, because the partners have transacted with those buyers repeatedly and their calls get returned. That is the whole product, and it is the thing worth testing.
Where it strains
Two deals hitting diligence in the same month with three people available is a real constraint, and the seller who suffers is the one who complains least. Ask how many live mandates the team carries today, what happens if another closes at the same time as yours, and who covers if the lead partner is unavailable for a fortnight.
The questions that reveal it
Closed transactions in your sector at your size in the last two years, with two sellers you can call. Who by name does the work, and their current load. The number of buyers to be approached and how many they have closed with. And the fee terms in writing, including the minimum and the tail.
Questions people ask about small M&A advisory firms
Are small firms cheaper?
Not usually. Minimum fees are similar because the work is similar. The difference is attention rather than price.
Will institutional buyers take them seriously?
In their sector, yes. Buyers respond to people whose deals they have done before, which is a relationship rather than a brand.
What is the biggest risk?
Capacity, followed by key person risk in the firm itself. Both are answerable with the questions above before you commit.