It is vital for those considering the sale or valuation of their company to recognize the difference between investment banking and licensed mergers and acquisitions advisors. The term “investment banking” is frequently interchanged with business brokerage, as well as the mergers and acquisition industry. Investment banking is, in fact, an integral part of mergers and acquisitions. Investment banks provide much of the financial funding for M&A deals. 

Selling a business is far different from selling a house or other tangible asset where there exists comparable sales information sufficient to support a value. Unlike real estate, it is not unusual for 50% or more of an operating business’s value to be based on intangible assets such as goodwill, intellectual property, licenses, location, etc.

Private equity groups (PEGS) are unique in their investment strategies, in that their main interest lies within investing capital with the intention of acquiring a higher return in the future. The future for many PEGS can be as short as 18 months while others will buy and hold for years. A PEG’S main focus is generally platform companies having EBITDA of over $3,000,000 but PEGS has also been acquiring strategic add-ons or bolt-ons to platform companies already in their portfolios.