Straight answers to the questions business owners ask most, before and after they hire an advisor.
Answers reviewed by Ron Smith, Founding Partner of Cordis Group LLC, publisher of Top Exit Advisors, drawing on Cordis Institute transaction research. Last updated July 11, 2026.
An exit advisor manages the sale of a business end to end: preparing the company for buyer scrutiny, building the marketing materials, running the buyer outreach, managing diligence, and negotiating terms through close. Business brokers typically handle smaller, main-street businesses on a listing model. Investment banks run structured processes for larger companies, generally above $25M–$50M in enterprise value.
In the lower middle market the labels blur, so judge the person by transactions completed at your size and in your industry rather than by the title on the card. Our guide to choosing an exit advisor covers the selection process in detail.
Earlier than most founders think. Cordis Institute research on lower-middle-market transactions (Working Paper WP-001, The Preparation Gap in Early 2026) finds that 73% of deals include at least one post-LOI price adjustment, averaging 18% of the initial price, and that the only window in which preparation gaps can be systematically addressed is 12–24 months before a banker is retained.
Engaging an advisor a year or more before you intend to go to market lets you fix the issues buyers will otherwise price against you. See the twelve-month exit plan that actually closes at LOI value.
Most sell-side advisors combine a retainer (monthly or upfront work fee) with a success fee paid at closing. The success fee is usually a percentage of transaction value, often on a scaled formula where the percentage declines as deal size rises, sometimes with a higher percentage on value achieved above a threshold.
The retainer filters for serious sellers and funds preparation work; the success fee aligns the advisor with the outcome. Be cautious with structures that are all retainer and no success fee, or that charge large upfront “valuation” or “marketing” fees with no path to a transaction.
There is no fixed schedule, but the pattern is consistent: the smaller the deal, the higher the percentage. Main-street brokered deals commonly run around 8–10%; lower-middle-market deals in the $5M–$50M range are frequently quoted in the low-to-mid single digits, often with a minimum fee; larger deals fall to 1–2%.
Structure matters as much as the headline rate: what counts as transaction value (debt assumed, earnouts, rolled equity), when the fee is earned, and what the tail period covers. Get the formula in writing and model it against realistic outcomes before you sign.
A quality of earnings report is an accounting analysis, usually prepared by a CPA firm, that tests whether your reported EBITDA is real, recurring, and correctly adjusted. Buyers almost always commission their own QoE in diligence. A sell-side QoE, done before you go to market, surfaces the same findings a buyer’s provider will find, while you still have time to fix or explain them.
For most companies above roughly $2M of EBITDA it is one of the highest-return investments in the process, because surprises found by the buyer’s QoE are the most common trigger for post-LOI price reductions. For what the provider examines first, see what a quality of earnings provider actually tests first and how top exit advisors stress-test a QoE report.
The working capital peg is the level of net working capital you agree to deliver at close. Deliver less and the purchase price is reduced dollar for dollar. Working capital adjustments now appear in more than ninety percent of private-target transactions (SRS Acquiom, 2025), yet most founders never model the peg before the buyer proposes it.
Calculate your own trailing-twelve-month working capital bridge, define the components (line of credit, deferred revenue, what counts as debt) before the buyer does, and negotiate the collar and true-up timing. Full treatment in the working capital peg that quietly costs founders a million dollars.
Because the LOI is non-binding and the diligence period that follows is where buyers test every assumption behind their price. Cordis Institute research finds 73% of lower-middle-market transactions include at least one post-LOI adjustment, averaging 18% of the initial price, driven primarily by information asymmetry rather than market conditions. The buyer’s underwriting model knows what it will find; the unprepared seller does not.
The fix is upstream: know your numbers the way a buyer will read them before the first offer arrives. See why the highest LOI often becomes the lowest close price.
From formal launch to close, a well-run lower-middle-market process typically takes 6–12 months: roughly 2–3 months of preparation and materials, 2–3 months of buyer outreach and management meetings, and 3–6 months from LOI through diligence, documentation, and close.
Add the 12–24 months of pre-process preparation that separates clean closes from re-traded ones and the realistic answer is: the sale takes about a year, but the outcome is decided in the year or two before it.
Substantially. Cordis Institute Working Paper WP-002, The Buyer Lane Preparation Map, maps five active buyer archetypes in the lower middle market: the private equity add-on, the PE platform, the strategic acquirer, the family office, and the search fund. Each underwrites the same business against a different model. A PE add-on prices through a debt-service constraint; a strategic prices to synergy realism; a search fund works under SBA lending rules with specific addback treatment.
Preparation calibrated to a generic buyer addresses none of the model-specific frictions, so mapping your likely buyer set is one of the first things a good advisor will do.
Focus on five clauses: the fee formula and what counts as transaction value; the exclusivity term and how you can terminate; the tail period (how long after termination the advisor still earns a fee on buyers they introduced); the scope of work and named team members; and any expense caps.
A 12–24 month tail limited to buyers actually contacted is normal; an unlimited tail on any buyer is not. Have your transaction attorney review it. It is a negotiable document, and how the advisor handles that negotiation is itself useful information. For a clause-by-clause read, see how to read an engagement letter at Best Exit Advisors.
Ask for the last five completed transactions, not the best five: size, industry, buyer type, and how close price tracked the LOI. Ask who will actually run your deal day to day. Ask for references from sellers whose deals did not close, not just the wins. Verify claimed transactions against public records where possible.
And be wary of anyone who leads with a valuation higher than everyone else’s; the inflated estimate that wins the engagement is rarely the number that survives diligence. The vetting framework at Best Exit Advisors offers a structured checklist.