How to Sell Your Startup: A Guide to M&A Advisors
Don't just focus on the 7% fee. A great M&A advisor runs a competitive process that can add 20-50% to your exit price and save the deal from collapsing. Here's how.
TL;DR: Selling your startup is a 1,000-hour ordeal that can tank your company if you do it alone. Hiring a specialized M&A advisor (or "banker") creates a competitive auction, secures better terms beyond price, and manages the process so you can keep running your business. Their fee is an investment in maximizing your exit value and minimizing deal risk.
Key takeaways
- Never accept a solo inbound offer; use it to start a competitive process.
- Hire a specialist M&A advisor for your industry and deal size, not a generalist.
- The advisor's fee is dwarfed by the value they create through a competitive auction.
- Focus on negotiating terms (escrow, earn-outs, liability) not just the headline price.
- Your job during the sale is to keep running your company. Let the advisor run the process.
- Understand the difference between a stock sale and an asset sale; it can save you millions in taxes.
Your Time Isn't Free. It's Worth 20% of Your Company.
You’ve spent five years building your company. An unsolicited, nine-figure offer from a brand-name acquirer lands in your inbox. The question isn't if you should sell. The question is how.
Your first instinct is to handle it yourself to save a few points on commission. This is a catastrophic mistake. Selling your company isn't a side project; it's a 1,000-hour, six-month siege. If you and your executive team get pulled into managing a deal, who is running the business? While you're buried in diligence spreadsheets, your company's growth will flatline. The buyer will see this in your updated financials and use it as justification to lower their price by 10-20% at the eleventh hour. The money you tried to "save" on fees is lost, and then some.
A good M&A advisor, or “investment banker,” is not a cost center. They are an investment in a process that protects you from yourself and maximizes your outcome. Their job is to run a tightly choreographed auction that adds 20-50% to your final price and, more importantly, ensures the deal actually closes.
What You're Paying For: The Four Jobs of an M&A Advisor
An advisor's role breaks down into four distinct functions, each of which creates millions of dollars in enterprise value.
1. The Storyteller: Packaging the Narrative
A buyer needs to believe your company is the key to their future strategy. Your advisor’s first job is to craft the story and materials that make this case.
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