The person or firm you hire to run your sale process shapes almost everything that happens after. Who gets contacted, how your financials get presented, what kind of buyer shows up, and how much leverage you keep at the negotiating table all trace back to that first choice. Sellers often treat this decision as a formality, something to settle quickly so the "real work" of selling can start.
That is backwards. The engagement letter you sign with an intermediary sets the terms for months of work, and it is much easier to negotiate before you sign than after. Once a process is underway, most sellers are reluctant to switch intermediaries mid-stream even when the fit turns out to be poor, because restarting a marketing process costs time and can signal weakness to buyers who already saw the company shopped once. Here are the topics worth reviewing with your advisors before you commit to anyone.
This is not a decision to make on referral alone, even when the referral comes from someone you trust. A friend's positive experience selling a manufacturing business tells you little about how that same intermediary would handle a services company half the size, or a founder who wants to stay on for a transition period. Treat the selection process itself as a small due diligence exercise, with its own questions, references, and comparison points.
What investment bankers and business brokers actually do differently
The terms get used interchangeably, but the two roles usually serve different transaction sizes and structures. Business brokers typically work with owner-operated companies in the smaller middle market, often listing a business somewhat like a real estate agent lists a property, with a defined asking price and a broad buyer pool.
Investment bankers more often run a structured, competitive process for larger or more complex transactions, building a confidential information memorandum and soliciting indications of interest from a curated list of strategic and financial buyers. Neither approach is inherently better. The right fit depends on your company's size, industry, and how much of a competitive auction environment you actually want.
Deal size and industry fit
Ask any intermediary you are considering for a candid read on where your company falls in their typical deal range. A firm that mostly closes small local transactions may not have the buyer relationships to run a strong process for a $30 million business, and a firm built for larger deals may not give a smaller sale the attention it deserves.
Industry familiarity matters just as much. An intermediary who has sold companies in your sector already knows which buyers are actively acquiring, what multiples recent deals have commanded, and which operational details buyers scrutinize most closely.
Fee structures to review before you sign
Most engagement letters combine a few fee components, and the details are worth understanding before you sign anything:
- Retainer or upfront fee. Some intermediaries charge a monthly or one-time retainer to begin work, sometimes credited against the eventual success fee.
- Success fee. Usually a percentage of the final transaction value, often on a sliding scale known informally as a Lehman or double Lehman formula, where the percentage decreases as deal size increases.
- Minimum fee. A floor amount that applies even if the transaction closes at a lower value than expected.
- Tail provision. A clause entitling the intermediary to a fee if you sell to a buyer they introduced within a set period after the engagement ends, even without their direct involvement in closing.
Each of these is negotiable to some degree, and understanding how they interact avoids surprises at closing.
Marketing process: broad auction vs targeted outreach
Ask how the intermediary plans to market your company. A broad auction contacts a wide pool of potential buyers to maximize competitive tension and price, while a targeted outreach approach quietly contacts a shorter list of buyers most likely to be genuinely interested, which can preserve confidentiality and reduce the risk of employees or competitors learning about the sale prematurely.
Neither approach is universally correct. A broad process tends to produce more competing offers, while a targeted process trades some of that competitive pressure for discretion and speed.
Confidentiality practices to ask about
Before any of your financial or operational details go out to prospective buyers, ask how the intermediary handles confidentiality. Do they require a signed non-disclosure agreement before releasing anything beyond a blind teaser? How do they screen buyers for genuine financial capacity before revealing your company's identity?
Some sellers worry about competitors, key customers, or employees learning about a sale before it is final, and a good intermediary should have a clear, repeatable process for managing that exposure rather than a vague assurance that they "are always careful."
Buyer qualification and screening
A strong intermediary does more than forward every inquiry that comes in. Ask how they qualify buyers before sharing detailed information: do they confirm proof of funds or financing capacity, verify strategic rationale, and screen out tire-kickers who waste a seller's time without any real intent to close?
The quality of a buyer pool usually matters more than its size. Ten seriously qualified buyers produce a better outcome than fifty who never had the capital or intent to follow through.
References and track record
Ask for references from sellers in similar industries and deal sizes, and actually call them. Questions worth asking those references include how closely actual outcomes matched initial expectations, how responsive the intermediary was during diligence, and whether anything about the process surprised them in a way they wish they had known beforehand.
A firm's website case studies are marketing material. A direct conversation with a past client tends to surface a more honest picture of what working with them is actually like.
Exclusivity and engagement term length
Most engagement letters include an exclusivity clause preventing you from working with another intermediary during the term. Review how long that term runs, what happens if the process stalls without a deal, and how either party can terminate the arrangement early if the relationship is not working.
A term that feels too long relative to your industry's typical sale timeline is worth raising directly rather than accepting by default.
How long a typical process takes
Ask for a realistic timeline, not the best-case version. Preparing marketing materials and building a buyer list usually takes several weeks before any outreach even begins. From first buyer contact to signed letter of intent can run anywhere from two to six months depending on how competitive the process is and how quickly buyers move. Diligence and closing after a letter of intent typically add another sixty to ninety days, sometimes longer if financing or regulatory approvals are involved.
An intermediary who promises a close in a handful of weeks for a company of meaningful size is either unusually well-positioned with a pre-qualified buyer already in hand, or setting an expectation they cannot meet. Either way, that promise is worth probing rather than taking at face value. Ask what has caused past deals with similar companies to take longer than expected, and how they managed sellers through that stretch.
What happens if the deal falls through
Not every process ends in a closed transaction. Buyers walk away over financing, diligence findings, or a change in strategic priorities, and it is worth understanding upfront how your intermediary handles that outcome. Does the engagement letter's tail provision still apply if the original buyer eventually comes back through a different channel months later? Is there a reduced fee or fresh negotiation if the process needs to restart with a new buyer pool?
It is also worth asking how the intermediary has handled sellers who decided, partway through a process, that they no longer wanted to sell at all. A process that respects a seller's right to change course, without punitive fees for walking away, says something about how the relationship is likely to feel if things get difficult later.
Coordinating your intermediary with tax and legal advisors
Your intermediary runs the marketing and negotiation process, but they are not a substitute for your tax advisor or M&A attorney. Structure decisions with real tax consequences, like whether a deal is structured as an asset sale or a stock sale, need input from your accountant well before terms are finalized. Business sale advisors who coordinate across these roles, rather than working in separate silos, tend to catch issues earlier when they are still cheap to fix.
Red flags worth taking seriously
A few patterns are worth pausing on before you sign an engagement letter: pressure to sign quickly without time to review the terms, vague answers about how buyers get contacted or screened, reluctance to provide references, or fee structures that seem unusually complicated relative to the deal size. None of these alone is disqualifying, but together they are worth a longer conversation before you commit.
Getting the right advisors involved early
Selling a business well depends on more than picking a broker or banker. Your tax advisor, attorney, and financial advisor each play a role in shaping outcomes that show up long after the closing dinner is over. Questions to ask an advisor before you engage them can help you evaluate fit across every advisor on the team, not only the intermediary running the sale itself.
The Small Business Administration publishes general guidance on preparing a business for sale, and the IRS small business resource center covers how different sale structures are treated for tax purposes. Business brokers who are also registered representatives fall under FINRA oversight, and FINRA BrokerCheck lets you verify a broker's registration and disciplinary history before you sign anything. The SEC's investor education site and background reading on the business broker role round out the research worth doing before that first engagement letter lands on your desk.
Choosing who runs your sale process is one of the first real decisions in a business exit, and it deserves the same scrutiny you would apply to the buyer on the other side of the table. Capivise matches sellers with vetted advisors who can help evaluate intermediary fit alongside the rest of the exit team, and advisor verification is part of how that matching process works.
