Investment bank teams will usually be involved in transactions of more than $100 million due to the larger scope and stakeholder requirements, but they are not the same as M&A consultants. The difference is that an investment bank is a regulated institution in the business of advising and transacting in securities, whereas a consultant is an advisor who provides advice and consulting services to run an M&A process but does not personally transact in securities. However, high-quality M&A consultants typically have a background or relevant experience in investment banking.
Fees for investment banking in middle market M&A transactions of $100 million or more can be up to 5% of the transaction size and may include mandatory retainer fees. These fees are in addition to accounting, legal, and any other deal fees. The client base for these services is typically larger and established middle-market and VC-backed companies that have sufficient capital and can derive a significantly higher transaction value by hiring a full investment banking team. The investment bank may also have a balance sheet and can provide debt to help facilitate an M&A deal for larger transactions.
Small and medium enterprises, owner-operator businesses, and startups may benefit from hiring a single M&A consultant to advise them. The fees will typically be much lower than for a full investment banking team, particularly for businesses under $50 million. These types of companies typically need only a consultant to help position the company for an M&A transaction, as well as help negotiate deal documents and transaction terms to ensure fair consideration.