What's the Difference Between an Investment Banker and a Business Broker?
If you're thinking about selling your business, you've probably come across two types of advisors: investment bankers and business brokers. Both help owners sell companies, but the similarities often end there.
Understanding the difference can mean the gap between a smooth, high-value exit and a frustrating, drawn-out process that leaves money on the table.
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The Business Broker: Main Street Transactions
Business brokers typically handle smaller transactions, often businesses valued under $2M. Think local restaurants, retail shops, service businesses, and franchises.
What Brokers Do Well
Volume-based approach: List many businesses, close what sells
Local market expertise: Strong knowledge of regional buyers
Accessible pricing: Lower fees make sense for smaller deals
Speed: Simpler deals can close quickly
Where Brokers Fall Short
Limited buyer reach: Often rely on listing sites like BizBuySell
Minimal deal structuring: Less sophistication in negotiating terms
Light due diligence support: You're often on your own once an offer comes in
No value creation: Focus is on selling today, not maximizing value
For a $500K business, a broker can be the right fit. But as deal size grows, so do the stakes. The gaps in this approach become costly.
The Investment Banker: Wall Street Sophistication
Investment bankers operate at the other end of the spectrum, typically handling deals above $50M, often in the hundreds of millions or billions.
What Investment Bankers Do Well
Rigorous process: Detailed financial analysis, professional CIMs, structured auctions
Deep buyer networks: Relationships with PE firms, strategics, and family offices
Deal structuring expertise: Navigate complex earn-outs, seller notes, and rollover equity
Dedicated teams: Analysts, associates, and MDs all working your deal
Where Investment Bankers Fall Short for Smaller Deals
Minimum deal size: Most won't touch anything under $50M to $100M
High fees: Retainers alone can run $50K to $150K
You're a small fish: Your $10M deal won't get the same attention as their $500M deal
Overkill for simpler transactions: Not every deal needs a 200-page CIM
If you're selling a $15M EBITDA company, investment banks are a great fit. But what if you're in the middle? Too big for a broker, too small for Goldman Sachs?
The Middle Market Gap
Here's the problem: businesses between $5M and $50M in revenue often fall through the cracks.
Brokers lack the sophistication these deals require. Investment banks won't return your call. And going it alone? That's how 70% of businesses fail to sell.
The $5M to $50M sweet spot is where deal complexity rises, buyer expectations increase, and professional guidance becomes essential. Yet traditional options don't fit.
This is exactly why we built Breakwater M&A.
The Breakwater Approach: Investment Bank Quality, Entrepreneur Focus
At Breakwater, we bring institutional-quality M&A advisory to businesses that Wall Street ignores. No attitude, no massive retainers, and no sense that you're deal #47 on someone's list.
We Start Before You're Ready to Sell
Most advisors show up when you want to list. We show up years earlier.
Our Exit Planning program helps you build a more valuable, sellable business starting today. We identify hidden profit, fix the financials buyers hate, and position you to command premium multiples when you're ready.
The result? Owners who plan their exit sell for significantly more than those who wing it.
Fractional CFO Advisory
Most businesses in our range don't have a CFO, and it shows. Messy financials, no KPI tracking, and cash flow surprises kill deals or crush valuations.
Our Fractional CFO service gives you executive-level financial leadership without the $300K salary. We build the reporting, forecasting, and financial systems that buyers expect, and that make your business more profitable right now.
What's included:
Monthly financial reporting and analysis
Cash flow management and forecasting
KPI dashboards buyers love
Valuation improvement roadmaps
Capital Advisory
Selling isn't always the right move. Sometimes the best path forward is:
Growth capital to scale before selling
Debt restructuring to improve cash flow
Recapitalization to take chips off the table while retaining control
Acquisition financing if you're buying, not selling
Our Capital Advisory practice helps you navigate these options, whether you're preparing for a future sale or funding your next phase of growth.
A Real M&A Process (Not a Listing)
We don't "list" your business and wait. We run a professional deal process:
Buyer research: We identify and vet 50 to 200 qualified buyers from our 10,000+ database
Confidential outreach: Controlled, NDA-protected conversations
Competitive tension: Multiple buyers, real deadlines, better offers
Full deal support: From LOI through close, we're in the trenches with you
Quick Comparison: Broker vs. Investment Bank vs. Breakwater
Which Option Is Right for You?
Choose a business broker if:
Your business is valued under $1M to $2M
You're looking for a quick, simple transaction
Local buyers are your primary audience
Choose an investment bank if:
Your business has $10M+ EBITDA
You're running a competitive auction with global buyers
Deal complexity justifies significant upfront fees
Choose Breakwater if:
You're in the $5M to $50M revenue range
You want investment-bank quality without the gatekeeping
You value exit planning and pre-sale preparation
You want a dedicated team that treats your deal as a priority
The Best Time to Start Is Now
Whether you're selling in 6 months or 5 years, the work you do today determines the outcome you get tomorrow.
Our Exit Planning program helps you build value, clean up financials, and position your business for a premium exit on your timeline.
📞 Ready to explore your options? Book a free, confidential strategy session to discuss your goals and see if Breakwater is the right fit.
Key Takeaways
Business brokers are best suited for smaller deals under $2M, offering local expertise and accessible pricing.
Investment bankers handle large transactions above $50M with rigorous processes and deep institutional networks.
Businesses valued between $5M and $50M often fall through the cracks — too complex for a broker, too small for an investment bank.
Starting exit planning early (1 to 2 years before a sale) can significantly increase your valuation and shorten your timeline.
A middle-market M&A advisor like Breakwater combines investment-bank quality with dedicated, entrepreneur-focused service to bridge the gap.
Recommended Reading
Business Valuation Explained: How Buyers Value Your Company: A deeper dive into EBITDA normalization and valuation methods across industries.
How to Find the Right M&A Advisor: What to look for in an advisor and how to make sure their incentives align with yours.
How to Sell a Business with $500K in EBITDA or More: A step-by-step guide for owners in the middle market looking to maximize their exit.
Frequently Asked Questions (FAQs)
What is the main difference between an investment banker and a business broker?
Business brokers typically handle smaller transactions under $2M and focus on local, Main Street businesses. Investment bankers handle larger deals, often $50M and above, using structured auction processes and deep institutional buyer networks. The key difference comes down to deal size, process sophistication, and buyer reach.
At what size does my business need an investment banker instead of a broker?
There is no hard cutoff, but generally once your business exceeds $2M in revenue or $500K in EBITDA, you start to outgrow what a traditional broker can offer. At the same time, most investment banks won't engage with deals under $50M to $100M. Businesses in the $5M to $50M revenue range often benefit most from a middle-market M&A advisor like Breakwater.
Can I sell my business without an advisor?
You can, but the data suggests it rarely ends well. Roughly 70% of businesses listed for sale never close. A professional advisor runs a competitive process, identifies and vets qualified buyers, and negotiates deal terms that protect your interests. The fees are typically far outweighed by the improved outcome.
How much does it cost to hire an M&A advisor?
Fee structures vary. Business brokers often charge a commission of 8% to 12% on smaller deals. Investment banks charge large retainers plus a success fee. Middle-market advisors like Breakwater typically charge a modest engagement fee plus a success-based fee tied to closing, so incentives are aligned with getting you the best result.
How long does it take to sell a business in the $5M to $50M range?
From preparation to closing, expect 6 to 12 months on average. Businesses with clean financials, documented operations, and low owner dependency tend to close faster. Starting exit planning early, even 1 to 2 years in advance, can significantly improve both timeline and valuation.
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