How to Choose an M&A Advisor for a Tech Company Under $50M

How to choose an M&A advisor for a tech company under $50M: check closed deals at your size, meet the person who will run your deal, read the fee and tail terms, and verify registration before you sign.

How to Choose an M&A Advisor, on Video

Video chapters

• 0:00 — Hire the Deal Lead, Not the Logo
• 0:36 — Start With Fit: Size, Sector, and Side
• 1:11 — Questions to Ask Before You Sign
• 1:40 — Fees and the Terms That Bite Later
• 2:22 — Check Registration Before References
• 2:52 — The Right Advisor Will Tell You to Wait

Read full transcript

Selling your tech company? You’re about to hire one person to run the biggest transaction of your career. So judge that person. Not the logo on the pitch deck. If your company’s under fifty million dollars in revenue, four checks do the heavy lifting. Closed deals at your size. The person who’ll actually run your deal. The fee and tail terms. And whether they’re registered or exempt. Fair warning. C4 Solutions offers M and A advisory too, so every test here works on us as well. The author of the full guide, Rhett Collver, has sat on both sides of this table. He built an MSP and ISP past five million dollars in revenue, sold it, then spent years in investment banking. From the owner’s chair, every advisor sounds the same. So skip the pitch. Test the work.

Size comes first. Ask for closed deals from the last twenty-four to thirty-six months that look like yours. Not deals in process. Closed. An advisor who usually sells two hundred million dollar companies will hand your twelve million dollar MSP to an associate. Sector matters next. MSP buyers want contracted monthly revenue and a service desk that runs without the founder. Software buyers fixate on churn and net revenue retention. Value-added reseller buyers dig into vendor relationships and product margin. Then the side of the table. Selling means building competition. Buying means finding targets and not overpaying. Plenty of firms only do one well. Here’s a fast test. Ask them to name five likely buyers for your company, right there in the meeting.

Bring the same questions to every first meeting. Who runs my deal day to day? Get a name. Then ask if that person will be on the buyer calls, and in the room when the letter of intent gets negotiated. Ask for their last three closed deals at your size. Ask which deals died, and why. Ask how many live engagements your deal lead carries, who’d buy your company, and what they’d fix first. Pay attention to that last answer. Good advisors push back. One who comes back with a long, specific list of things to fix in your financials, your contracts and your reliance on key people has actually read your numbers.

Fees get the attention. Terms do the damage. A typical engagement pairs a success fee, paid at close as a percentage of deal value, with an upfront or monthly work fee. Firmex surveyed over four hundred fifty advisors. Thirty-four percent raised at least one fee in twenty twenty-four, down from forty-seven percent the year before. Use that to frame the negotiation, not to set a price. Now read the engagement letter. Four clauses matter more than the headline percentage. Exclusivity. The tail. What counts as deal value. And whether the work fee gets credited at close. The tail is the one owners miss. If a buyer the advisor introduced closes after the engagement ends, the advisor still gets paid. And earnouts or seller notes can sit inside the number your fee’s calculated on. Cheap is expensive here, too. A lower fee with one bidder can cost far more than a higher fee with four.

This one gets skipped. When someone earns a success fee for arranging the sale of a company’s stock, federal securities law cares. Since March twenty-ninth, twenty twenty-three, M and A brokers have been exempt from SEC broker-dealer registration when they sell private companies with prior-year EBITDA under twenty-five million dollars, or gross revenue under two hundred fifty million. A tech company under fifty million dollars fits easily. But an exempt broker can’t provide the financing or sell to a group of passive buyers. So ask directly. Registered or exempt? Then check FINRA’s BrokerCheck. Either answer can be fine. A vague one isn’t.

Watch for a few red flags. A big multiple quoted in the first meeting, before anyone’s opened your books. The partner who pitched you disappears after you sign. Long exclusivity stacked on an open-ended tail. And an advisor who never says no. To anything. In Rhett’s view, proper exit preparation takes four to five years. Clean financials. Contracts that transfer. A team that runs without you. Buyers pay for every piece of that, and discount hard for every piece that’s missing. An advisor who hears we want to sell next quarter and says great, let’s list it, is working for their fee. Sometimes the honest answer is not yet. Is a business broker just a cheaper advisor? No. A broker lists the business and fields the calls. An advisor goes hunting for buyers, and that matters. One buyer sets the price. Three buyers negotiate against each other. Your next move? Interview three advisors. Ask each one the same questions. And pick the advisor who gave you the hardest truths, not the highest number. The full guide is on the C4 Solutions website, where you can book an M and A strategy call.

I’ve sat on both sides of this table. I built an MSP and ISP past $5M in revenue and sold it. Then I spent years in investment banking, pitching owners who looked a lot like I used to.

From the owner’s chair, every advisor sounds the same. Big network. Strong multiples. Deep sector experience. From the banker’s chair you learn what owners never ask, and the gap between the pitch meeting and the actual work is exactly where sellers leave money on the table that they will never see again.

So skip the pitch. Test the work.

What an M&A Advisor Does for a Company Your Size

An M&A advisor runs a sale or an acquisition on your behalf. They prepare the financials and the story, build the buyer or target list, run confidential outreach, create competition between bidders, negotiate the letter of intent, and manage diligence through close. Under $50M in revenue, that advisor is usually a boutique. Here’s how lower middle market M&A advisory works for tech companies at that size.

The labels blur at this size. Three kinds of firms will pitch you.

Brokers aren’t bad. They’re built for a different sale, and our roundup of MSP business brokers covers when one fits. Match the firm to the deal. Not to the deck.

Start With Fit: Size, Sector, and Side of the Table

Size first. Ask for closed deals from the last 24 to 36 months that look like yours in revenue and EBITDA. Not deals “in process.” Closed. An advisor who usually sells $200M companies will hand your $12M MSP to an associate, and one who usually sells $2M shops may not know the private equity platforms that pay up for recurring revenue.

Sector second. A telecom buyer and a SaaS buyer read the same P&L very differently. MSP buyers want contracted monthly revenue, low client concentration, and a service desk that runs without the founder. VAR buyers dig into vendor relationships and product margin. SaaS buyers fixate on churn and net revenue retention, which is why SaaS M&A advisory runs on different metrics. Your advisor should know which of those numbers your buyers will grind on before the first call.

Then the side of the table. Selling means building competition. Buying means finding targets, killing the wrong ones early, and not overpaying for the right one. Plenty of firms only do one of them well.

Here’s a fast test. Ask them to name five likely buyers for your company, in the meeting, without looking anything up.

Questions to Ask an M&A Advisor Before You Sign

Bring these to every first meeting. Write the answers down. Compare them side by side, because the real differences show up in the specifics.

• Who runs my deal day to day? Get a name. Then ask whether that person will be on buyer calls and in the room when the LOI gets negotiated.
• Walk me through your last three closed deals at my size, and what each one sold for against the first indication of value.
• Which deals died, and why? Everyone has some. An advisor who can’t answer that honestly worries me.
• How many live engagements is my deal lead carrying right now?
• Who would buy a company like mine, and which of those buyers have you actually closed with?
• How will you value the business? Look for a range built from comparable deals and your real EBITDA, not one flattering number. For a baseline before the meeting, read how MSP valuation multiples work.
• What would you fix before we go to market, and how long would it take?
• Are you a registered broker-dealer, or do you rely on the M&A broker exemption?

Pay attention to the second-to-last answer. Good advisors push back. An advisor who comes back with a long, specific list of things to fix in your financials, your contracts and your reliance on key people has actually read your numbers, which is more than the polished pitch ever tells you.

M&A Advisor Fees and the Terms That Bite Later

Fees get the attention. Terms do the damage.

A typical engagement pairs a success fee, paid at close as a percentage of deal value, with an upfront or monthly work fee. Firmex surveyed more than 450 M&A advisors across six continents for its M&A Fee Guide 2024-2025 and found that 34% raised at least one type of fee in 2024, down from 47% the year before, while more firms agreed to deduct work fees from the success fee. That’s a global middle-market sample. Use it to frame the negotiation, not to set a price.

For a U.S. benchmark that isn’t selling you anything, the Pepperdine Private Capital Markets Report surveys investment bankers and business brokers every year, alongside lenders and private equity groups.

Now read the engagement letter. Four clauses matter more than the headline percentage.

• Exclusivity. How long are you locked in, and can you walk if the advisor stops performing?
• The tail. If a buyer the advisor introduced closes after the engagement ends, the advisor still gets paid. Ask how long it runs and whether it covers only buyers they actually brought to the table.
• What counts as deal value. Earnouts, seller notes, rollover equity and assumed debt can all sit inside the number the fee is calculated on. Our breakdown of earnouts, seller notes, and rollover equity shows why that matters. You could pay a fee at closing on money you collect in three years, or never.
• Crediting. Is the work fee deducted at close, or is it on top?

Cheap is expensive here. A lower fee on a sale with one bidder can cost you far more than a higher fee on a sale with four, because the fee is a percentage of the price and the price is set by how many serious buyers are still at the table when the letters of intent come in.

Check Registration Before You Check References

This one gets skipped.

When someone earns a success fee for arranging the sale of a company’s stock, federal securities law cares. Since March 29, 2023, Exchange Act Section 15(b)(13), codified at 15 U.S.C. 78o, has exempted M&A brokers from SEC broker-dealer registration when they sell privately held companies with prior-year EBITDA under $25 million or gross revenue under $250 million. A tech company under $50M in revenue fits easily.

The exemption has limits. An exempt M&A broker can’t bind a party to the deal, can’t provide the financing, can’t take custody of the money or securities changing hands, and can’t sell your company to a group of passive buyers. State securities rules still apply on top.

So ask directly. Registered or exempt?

Then check. Registered firms and representatives appear on FINRA’s BrokerCheck, disciplinary history included, and registered investment advisers appear on the SEC’s Investment Adviser Public Disclosure site. Either answer can be fine. A vague answer isn’t. This is general information, not legal advice. Put the specifics in front of your deal attorney.

Red Flags When You Choose an M&A Advisor

I watched a few of these from the banker’s side of the desk.

• The number arrives before the diligence. An advisor who quotes a big multiple in the first meeting is bidding for your signature, not valuing your company.
• The partner who pitched you disappears after you sign.
• Long exclusivity stacked on an open-ended tail.
• No questions about your financials, your client contracts, or how much of the business runs through you.
• They never say no. To anything.

Each one shows up later as a lower price or a dead deal. Our list of MSP exit strategy mistakes traces how that happens.

The Right Advisor Will Tell You to Wait

Here’s the test that separates advisors from salespeople.

Proper exit preparation takes four to five years. That’s my view after building a company, selling it, and then advising on deals like it, and it’s why I tell owners that M&A is a growth lever now, not a project for later. Clean financials. Contracts that transfer. A team that runs without you. Client concentration under control. Buyers pay for every piece of that and discount hard for every piece that’s missing, so an advisor who hears “we want to sell next quarter” and simply says “great, let’s list it” is working for their fee, not your outcome.

A good advisor tells you what’s broken. Then how long the fix takes.

Sometimes the honest answer is not yet.

That’s how C4 Solutions approaches exit preparation and buy-side advisory. Find the gaps buyers will price in, fix them, and go to market when the business can hold up under diligence.

Your Next Move

Interview three advisors. Ask each one the same questions. Have your attorney read every engagement letter before you sign one, and pick the advisor who gave you the hardest truths, not the highest number.

Want a second set of eyes on your shortlist, or a straight read on whether you’re ready to sell at all? Book an M&A strategy call.

Book an M&A Strategy Call