Selling an SME is an important moment in the business life. It's often about the entrepreneur's life's work: years of building up, investing, taking risks and hiring people. The step towards sales is emotionally and financially drastic.
However, we often see that entrepreneurs with a relatively small deal value (less than €5 million) initially consider using a traditional M&A advisor or investment bank. Logical, because the term “M&A firm” sounds professional and gives the impression of maximum value creation. But is that really the case?
In this article, we explain why it is not logical to hire an M&A firm for a small sale of an SME. We look at the costs versus revenues, the added value of an M&A firm, and we outline an alternative that is better suited to transactions below €5 million.
In the world of mergers and acquisitions, a lot is about deal size.
- Small SME sales: sales value < $5 million
- Mid-market: between $5 and $100 million
- Large-cap: > $100 million
In practice, smaller transactions often involve companies with:
- 10—50 employees
- Annual turnover between $250,000 and $10 million
- Net profit levels ranging from $50,000 to $1 million
These are serious companies, but not multinationals. There are very different rules for these types of deals than the mega deals that M&A firms advertise widely.
An M&A firm (investment bank or corporate finance office) usually offers a complete sales process:
1. Preparation — analysis of figures, preparation of an information memorandum, longlist potential buyers
2. Market approach — connecting with candidates, sending teasers, arranging NDAs
3. Process management — coordinating bids, negotiations, due diligence
4. Completion — drafting contracts in collaboration with lawyers, supervising closing
On paper, that looks good. But the price tags are solid:
- Retainer fee: often $5,000 — $10,000 per month, sometimes for 6—12 months
- Success fee: usually 3— 7% of the deal value
For a company that sells for $3 million, for example, this quickly means:
- Retainer: $50,000 — $100,000
- Success fee: $90,000 — $150,000
- Total: $140,000 — $250,000 in costs
This is a substantial amount for an entrepreneur who sells his life's work, especially when the proceeds are needed for retirement or a fresh start.
The value of an M&A firm is evident in large deals, but the added value is limited in small SME transactions. Buyers are often local parties (competitors, suppliers, entrepreneurs) that don't require a global network. Financing is often simple, due diligence is clear, so the question is whether the added value outweighs the high costs.
Many M&A firms are actually not interested in small deals. It takes as much time for an office to supervise a €3 million deal as a €30 million deal, but the fee is ten times lower. The result: small deals often receive less attention and are mainly handled by junior employees.
1. Costs are quickly getting out of hand
2. Limited added value
3. Less office priority
4. Complex process
5. Mismatch in expectations
For transactions with a sales value below €5 million, there is one alternative that is really better than an expensive M&A firm: do the sales process yourself with the right tools and support.
At BestBonobos, you pay a fixed fee of approximately $249 per month. A sales process takes an average of 18 months, making the total investment around $5,000 — a fraction of the tons a traditional M&A firm requires.
For that, you get:
- AI-driven valuation
- Structured preparation tools
- The opportunity to approach buyers yourself, well prepared
Want extra support? Then you hire your own accountant, tax specialist or lawyer on an hourly basis. You stay in control and the costs remain manageable.
Entrepreneurs sometimes choose an M&A firm out of prestige or the idea that it provides maximum value. In reality, entrepreneurs often know their market better and prestige does not earn extra euros.
Suppose an entrepreneur sells his company for €3 million.
- With BestBonobos:
- Platform fee: $299 × 18 months = approximately $5,000
- Accountant/tax specialist advice: approx. $10,000
- Total: approx. $15,000
- Net revenue = $2,985,000
- With an M&A firm:
- Retainer + success fee: approx. $200,000
- Net revenue = $2,800,000
Difference: $185,000 — enough for several years of retirement or the start of a new project.
For international deals, more complex structures, or deal values > €10 million, an M&A firm can certainly add value.
For sales below €5 million, an M&A firm's costs are disproportionate to revenue. Doing it yourself with BestBonobos and optionally hiring your own advisors is often the smartest and most profitable choice.
With BestBonobos, entrepreneurs can objectively value their business, find buyers without expensive retainers, and keep most of the proceeds in their own pockets. This way, sales remain organized, affordable and effective.
👉 Sign up for the BestBonobos beta today and learn how our platform helps you identify the right buyers and go through every step of the sale in a smarter way.
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