Guide
Deal size: where a broker stops and an advisor starts
Updated
Rules of thumb vary by writer. Congress drew a harder line: the M&A broker exemption sets by statute the company size a firm may broker unregistered, the most objective boundary.
Question 1
Which side of the deal are you on?
This checker is built for owners selling. Buy-side and capital raising are separate mandates and get their own answers.
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The statutory line
An eligible privately held company under 15 U.S.C. 78o(b)(13) is one with no securities registered with the SEC that, in its prior fiscal year, had EBITDA of less than $25,000,000 or gross revenues of less than $250,000,000.
The two are joined by OR. A business with $300,000,000 of revenue and $20,000,000 of EBITDA still qualifies on the EBITDA limb; only a company failing both tests falls outside. Above that line, an unregistered firm cannot lawfully broker the sale and you need a registered broker-dealer.
Both figures adjust for inflation every five years beginning 29 December 2027, on an Employment Cost Index formula rounded to the nearest $100,000.
Below the line, size is about process not permission
Almost every owner-managed business in the country sits comfortably below those thresholds, so the statute rarely decides the choice in practice. What decides it is the process the business deserves.
A business one person can buy and run is a listing problem: reach a wide pool of mostly unknown individual buyers. A business only a company can buy is a curation problem: identify twenty plausible acquirers, approach them under NDA, and create tension between the four that engage. Different jobs, done by different firms.
The mismatch that costs the most
Hiring a bulge bracket process for a small company is wasteful but visible, and most owners avoid it. The expensive mistake runs the other way: listing a business publicly when it had four strategic acquirers, because a listing is what the intermediary you happened to meet does.
The cost is not the fee. It is the buyer who never heard the business was for sale, and it shows in no comparison because you never learn the number you missed.
Ask what the last five deals looked like
Not how many, nor the total value. Ask what the last five looked like: the buyers, asset or stock sales, how many bidders reached a second round, and time from engagement to close.
A firm that runs curated processes answers with buyer types and bid counts. A firm that lists businesses answers with listings and enquiries. Both answers are legitimate and they tell you immediately which of the two you are talking to, which no fee schedule will.