Broker and investment bankers are two words used interchangeably. Many people don’t know the difference between the two. Although they may sound alike, these two words are different in many ways. If you are in the business industry, it is a must to know the difference between the two. By doing so, you will know who you need and to whom you can benefit the most.
Who are brokers?
Brokers sell entrepreneurial businesses, and they often sell it to other entrepreneurs, private equity firms, small private equity firms, venture capitals, and little roll-ups. Brokers focus on helping entrepreneurs get the maximum value for their business.
Who are investment bankers?
They are people that came from an investment banking background. Rather than helping small scale businesses, investment bankers handle large deals – the ones that cost a hundred million dollars. They work as a part of financial institutions that are concerned with raising capital for big corporations and government entities.
The majority of merger and acquisition deals are done by brokers, while investment bankers focus their attention on large sales – literally big deals. If your business makes 50 million or less, then most likely, investment bankers won’t find it interesting. It’s going to be small for them, but you’re going to be a big catch for brokers. However, as time passes by, some investment banking firms serving clients in the middle market.
What sets investment bankers different from business brokers is their service. They provide a broader line of financial services, public offerings, and fairness opinions. Investment banking firms are staffed with professionals with a wide range of experience, certifications, and licenses. Hence, enabling investment bankers to handle complex transactions and technical services. They are transaction-driven and have minimum fee expectations.
Whom should you choose?
When considering selling your business, it is a must to hire the right team. There are plenty of options to choose from, and making a decision can be quite confusing and daunting. When it comes to making your choice, you have to consider your best interest. Keep in mind that the low to middle market is catered mostly by brokers, investment bankers, and merger and acquisition advisors.
If you are unsure as to whom to choose – a business broker or investment banker, take the time to talk to both and figure out who makes you feel great. However, you have to keep in mind that how someone makes you think is one thing, and considering the size of your business is another. The point here is that you have to take the time and weigh all your options. Do not make impulsive decisions. Consider all essential factors and, if needed, ask the help of experts. Contact Freedom Factory to know more about your options. It is one of the world’s best business brokerage firms run by a serial entrepreneur, Robert Hirsch.
Watch out of Podcast How Are Brokers Different From Investment Bankers?