Guide
Who is allowed to broker a business sale, in the UK and the US
Updated
Neither title is a qualification. Anyone can call themselves a business broker or an M&A advisor, which makes knowing where the actual legal lines fall worth ten minutes.
The UK position: the sale of a body corporate exclusion
Arranging deals in investments is a regulated activity in the UK (article 25 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001), and shares are investments. Selling a company would therefore look like regulated business, except that article 70 of the same Order carves it out. Article 70 excludes from articles 25(1) and (2) arrangements made for a transaction to acquire or dispose of shares in a body corporate where either the shares consist of or include 50 per cent or more of the voting shares
and the parties are bodies corporate, partnerships, single individuals or groups of connected individuals, or the object of the transaction may nevertheless reasonably be regarded as being the acquisition of day to day control of the affairs of the body corporate
(article 70). Advising on such a transaction is excluded too.
The practical consequence is that a UK business broker handling an ordinary sale of a private trading company needs no FCA authorisation, and there is no register to check them against. It also means the exclusion is drawn around control. A minority stake sale or a growth capital raise can fall outside it, and then the person arranging it may need to be authorised or to act through an authorised firm.
The US position: the M&A broker exemption
Federal law now exempts an M&A broker
from registration under section 15 of the Securities Exchange Act. The exemption was added by Public Law 117-328 on 29 December 2022 and took effect 90 days after enactment. It applies only to an eligible privately held company
, which the statute defines as one with no registered class of securities and which, in the fiscal year before the broker was engaged, had either earnings before interest, taxes, depreciation and amortisation of less than $25,000,000 or gross revenues of less than $250,000,000 (15 U.S.C. 78o(b)(13)).
The exemption also stops at a list of excluded activities. Among other things an M&A broker loses it if the broker receives, holds, transmits or has custody of the funds or securities being exchanged, provides financing for the transfer, binds a party to a transfer of ownership, represents both buyer and seller without clear written disclosure and written consent from both, forms the buyer group itself, or acts in a transaction with passive buyers.
That exemption is from federal registration under section 15. It does not by itself dispose of state-level requirements, and it is not a licence or an endorsement. Read the statute at the link before relying on any of it, and take your own legal advice.
What to check instead of a licence
- Completed deals, not listings. Ask for the last five completions in your sector and size band, with the sellers' phone numbers.
- Who actually does the work. The person who wins the mandate is often not the person who runs it. Ask to meet them.
- The fee document. Minimum fee, what counts as consideration, whether retainers are credited, and the tail clause. These matter more than the headline percentage.
- Sole agency and its length. A long exclusive period with a weak firm is the most expensive thing you can sign in this process.