Architecting the Sale: How Advisor Model Shapes Premiums

Executive Summary

Selling a business is one of the most consequential financial and personal decisions an owner will make. While most sellers focus on cleaning up financials and engaging an advisor, they often overlook a critical determinant of value capture: advisor choice and alignment with seller goals.

This article argues that Advisor Design – ensuring the advisor’s deal team, approach and capabilities match the seller’s objectives – is central to unlocking premium valuations. Misalignment, by contrast, systematically lowers expected outcomes, often before a sale process even begins.

Key Takeaways:

• Seller Goals Drive Process: Business owners approach exits with different priorities: maximizing valuation, finding cultural fit, ensuring speed, seeking prestige, or simply testing the market. Each profile requires a different process design and imposes tradeoffs.

• Financial vs. Strategic Valuation: Standard financial processes anchor outcomes to market multiples (e.g., 4 – 8X EBITDA). Strategic processes, however, can justify significantly higher valuations by credibly demonstrating synergies such as revenue growth opportunities, technology or operational integration efficiencies, or market expansion potential.

• Advisor Deal Team Archetypes Matter:
  • Strategic Advisors craft and defend synergy narratives, unlocking optional upside.
  • Investment Banks offer broad reach and auction discipline but often under-leverage strategic value.
  • Business Brokers provide low-cost access but capture very little beyond market multiples.
  A deal team Archetype will be the right selection if it lines up with the seller profile – each archetype has a role to play in the large market for M&A.
• Decision Framework.
  Sellers must treat advisor selection as pre-process due diligence: diagnosing differentiation, testing advisors’ synergy narratives, evaluating process flexibility, ensuring incentive alignment, and modeling value trade-offs. This structured approach enables owners to choose the deal team best equipped to deliver their desired outcome.

• The Cost of Misalignment.
  For differentiated businesses, failing to articulate strategic value can leave millions on the table. In some cases, strategic positioning can mean a 50 – 60% uplift in enterprise value compared to a purely financial process—far outweighing advisor fees.

In Brief:

The type of acquisition a seller pursues should dictate the process undertaken and therefore the advisor firm and more importantly, the deal team they select. While overt costs like retainers and success fees are visible, the hidden cost of misalignment – foregone strategic value – can be far greater. Owners who align their goals with the right advisor approach maximize both financial return and legacy outcomes.

1. Introduction

Selling a business is one of the most important financial and personal decisions an owner will ever make. Yet many entrepreneurs enter the process with a limited understanding of their own goals and the M&A advisor landscape. By implicitly assuming any advisor can get them a “market” valuation, owners often end up with a misalignment between their objectives and the advisor’s capabilities – a mistake that can cost millions in unrealized value, jeopardize cultural continuity, or lead to a rushed process with the wrong buyer.

For a seller, it is the deal team that matters more than the firm behind it. This acquisition deal team is their capital “A” Advisor who will chart the path to transaction close, so it is the profile and capabilities of this team that are the success factors.

Not all M&A Advisors (i.e. deal teams) approach a transaction the same way. While a few Advisors will align their transaction approach with a seller’s goals, most will simply run their templated process, regardless of sellers’ ambitions. Investment banks and advisory firms who are geared toward transaction volume will generally find a deal (any deal) but are not usually going to work hard for a premium valuation. They may pass an offer off as a “market valuation” to placate the seller, but it is important to remember that market prices can only exist for commodities. With something distinct, like a unique value proposition or software platform, a good Advisor will reframe the target company as something more than a commodity – but this takes a deep understanding of both the strategic landscape and operational workings of the industry in which they are advising.

This article makes the case that most M&A advisors will work to capture a market valuation – which is perfectly appropriate for the majority of businesses profiles as the transaction process is straightforward with there being little differentiation to express. However, for sophisticated firms with something special or defendable, the onus is on the seller’s Advisor to articulate why a buyer should (happily) pay a premium for the business. Therefore, for target firms with that special something, they need a deal team who can knowledgeably and credibly convey the expanded value proposition – which requires a deep industry knowledge.

While a lengthy read, we feel this article is well worth the tiny investment of time for any owners or entrepreneurs considering selling their small- to mid- market firm – which is the market segment that this article addresses.

2. Advisor Design is a Large Value Determinant

In conventional discourse, the path to a successful M&A exit is often framed narrowly: tidy up the financials, hire an investment bank, run an auction. But this framing lacks one of the most consequential levers available to sellers – Advisor Design. The choice of Advisor, and the process that they run is not just tactical; it is a fundamental determinant of how much of the potential deal value is ultimately captured by the sellers.

“Market valuation” in M&A is commonly referred to as a multiple of the current year’s EBITDA (Trailing/Last Twelve Months or “TTM”/”LTM”, see below). Today’s market multiple for a professional services firm is typically from 4 – 8X EBITDA, itself a fairly nebulous range that incorporates the target domain and variability in financial metrics like revenue growth and profitability. Other industries will have their own market ranges, but they will all be a function of the expected cash flow generated by the acquired company. By default, a market valuation assigns no value to any strategic synergies (which are always unique to the specific combination of buyer and seller capabilities). When going to market for an acquisition, the pre-deal positioning and narrative (which is orchestrated by the Advisor) is a key set-up for subsequent synergy pricing, and a weak strategic story will not move the valuation range at all.

An ambitious seller with an Advisor who cannot identify potential strategic value drivers has limited their range of possible outcomes: the seller effectively “opts in” to a lower multiple regime by default. Thus, our central hypothesis is that ensuring alignment between seller goals and advisor capabilities – Advisor Design – is a necessary condition for unlocking strategic premium value, and misalignment systematically lowers the expected outcome before the process even starts.

A Note on Market Multiples:

Price per square foot/meter might be reference pricing for housing, but a realtor who happily offers your home with great view, large plot and a pool at “market” square foot pricing is hardly serving you well. This is not dissimilar to an M&A Advisor who does not capture a target’s unique or strategic value for the seller and merely seeks a generic market price.

As much as we all use comparables to reference acquisition market prices, it is really just a short-hand form to commonly reference acquisition prices. To say you can expect 4 – 8X EBITDA is more useful than saying “No idea, I don’t know your business”, but it is still just an assumed price for a generic business, subject to considerable variability.

3. Seller Archetypes and Why They Sell

To weigh up advisor options, it’s essential to first consider the intent behind a business sale. Sellers often have nuanced goals, but the most common motivations typically fall into five archetypal categories where the first two rely on strategic value or synergies to capture a high valuation (a Strategic Acquisition) and the remaining three are seeking a Financial Acquisition (at those 4 – 8X market multiples mentioned above).

1. The Maximizer: Highest Valuation (Strategic Acquisition)

   This seller is focused on extracting maximum value for their differentiated business. They are prepared for a longer process in order to articulate and capture strategic worth and creative negotiation – all in service of pushing the price ceiling.

   Example: A software-as-a-service (SaaS) firm with proprietary technology and strong recurring revenue engages a strategic advisor to position the company as a must-have acquisition. The advisor highlights several integration or feature synergies with major platform providers plus a few new partner service offerings, in order to secure a valuation multiple noticeably above market norms.

2. The Optimizer: Great Fit (Strategic Acquisition)

   Legacy matters. These sellers want to capture strategic value but are willing to trade some of that to find the right buyer. They are looking for a good balance between valuation and team growth, customer continuity, and cultural alignment.

   Example: A highly scalable digital marketing agency chooses to sell to a global company that was not the highest bid but shares its work-from-anywhere ethos. The sellers still receive a premium over a financial valuation while ensuring long-term continuity for team and suppliers, and some retention of their founding culture.

3. The Sprinter: Swift or Simplified Process (Financial Acquisition)

   For some owners, time and certainty outweigh incremental valuation. Personal circumstances, debt cliffs, internal deal capacity, or shifting market dynamics may drive the need for speed and simplicity. Alternatively, their business may not be widely differentiable from many of its peers, so a market valuation is all that can be hoped for, and a speedy exit is a perfectly appropriate goal.

   Example: A PR and Communications firm facing succession challenges seeks a transaction within six months. The advisor structures a broad financial process, prioritizing speed and certainty over exhaustive buyer positioning or strategic value capture.

4. The Validator: Prestige and Recognition

   Certain entrepreneurs seek validation through the buyer’s brand or the headline valuation – even if structured with contingencies. Others are flattered by the advances made by a prospective buyer. Prestige, legacy, and ego can be part of the calculus, even if never admitted in public.

   Example: A digital agency agrees to be acquired by a Global Marketing Holdco, after numerous inquiries by the Holdco, accepting a lower valuation to ensure the visibility of the deal.

5. The Explorer: Testing the Market

   Some sellers are curious but not committed. Perhaps they have received unsolicited interest a number of times and they want to see what the market really thinks of their business. They may use a sale process as a form of valuation or interest discovery.

   Example: A media services firm engages an advisor for a “soft market check,” gauging their preparedness and buyer interest without committing to a sale unless the right opportunity emerges.

   Each of the above goals implies different constraints and tradeoffs:

   • A seller seeking valuation optimization must expect the advisor to build a strategic value case (not just financial benchmarks). Advisors must take the lead in building the strategic case.
   • A seller with little competitive differentiation or one prioritizing speed and certainty may prefer a traditional financial process that trades upside optionality for process discipline and simplicity.
   • A seller seeking fit or legacy may implicitly accept a lower premium to ensure buyer alignment (i.e. “I’d rather have the right buyer at 8X than the wrong one at 9.5X”).

An Advisor that cannot identify and amplify the strategic leverage points and/or only knows how to run a financial auction process cannot credibly support goals beyond maximizing a “market multiple.” Thus, mismatches arise when seller goals exceed the advisor’s methodological or capability boundary.

4. M&A Advisor Archetypes and Their Tradeoffs

Now that the idea that seller’s goals differ and valuations are not pre-ordained, we move to discuss the Advisors (the deal team), who will help the sellers navigate this. A large investment bank is undoubtedly a successful, goal-oriented enterprise and they will naturally deploy their top talent and strategically minded teams to the larger, strategic deal with more (bank) upside. In the small- to lower mid- market range, investment banks deploy more junior teams to run a financial-centric transaction process. As such, not all deal teams are created equal. In particular, three broad archetypes, (which specifically relate to the deal team rather than the firm type) dominate:

A Strategic Advisor is required in order to pursue a strategic valuation because value articulation is so reliant on a deep understanding of the industry in which the transaction will take place. The Strategic Advisor may come from an investment bank or an M&A Advisory firm, but they will have deep industry and strategic qualifications.

As the Advisor archetype relates to the deal team deployed, any M&A advisory firm or investment bank could easily flip between a financial acquisition (Investment Bank archetype) or strategic acquisition (Strategic Advisor archetype) with a simple change in approach and team. In the small- to lower mid- market range, it is less common for investment banks to pursue strategic acquisitions simply because the necessary approach is so reliant on the deep industry knowledge of the team.

Advisor Tradeoff Analysis

As with anything in life, there are tradeoffs with choosing the Advisor, and this is where the importance of the sellers knowing their goals comes in. For an entrepreneur wanting to ensure they are adequately rewarded for their effort, risk-taking and sacrifice, a methodical cataloging of their strategic positioning with a Strategic Advisor ensures they have explored their most fruitful avenues of value.

• Breadth vs Depth: Investment Bank archetypes bring broad access; Strategic Advisors trade such reach for industry depth, which is critical when attempting to articulate strategic value. Further, strategic buyers will be industry-centric, so a broadcast distribution is unnecessary.
• Standardization vs Customization: Business Broker and Investment Bank archetypes rely on template CIMs and a repeatable process with set guardrails; Strategic Advisors develop customized narratives for buyer segments and work more collaboratively with buyers to identify a mutually beneficial structure.
• Certainty vs Optionality: The financial path offers more predictable execution; the strategic path offers optional upside. However, even if the strategic narrative doesn’t resonate, the strategic advisor will at least receive the same financial-centric offers of an investment bank.
• Incentive alignment: Some Advisors are structured to favor speed and deal certainty over extended value extraction.
• Cost vs Capture: The retainer of a Strategic Advisor may seem high, but this is because it requires a senior, experienced team and if it enables even a 20 – 30 % uplift, the net return easily justifies it. Notably, retainer fees are usually set off against the success fee, which eliminates the retainer cost altogether in the case of a transaction.

Because synergy-based valuation is more subjective, the Advisor’s job is to know what should be valued by the buyers and to point it out to all buyers equally. This can only be done by a team who have spent time in the industry in question. It is not something a team of career M&A bankers or specialists can do well.

Each advisor archetype has its place. The vast majority of deals that occur (by count) are small, homogeneous firms in commoditized markets and a Strategic Advisor would be overkill, but a Business Broker or Investment Bank archetype is an appropriate deal team. On the other hand, specialized firms with a distinct brand or moat etc, would be encumbering their likely valuations if they didn’t select a Strategic Advisor.

Below is a brief mapping table of the sellers to the deal team archetype.

5. Valuations: Financial vs Strategic Frameworks

To see why methodology and Advisor Design matters, we must delve a little deeper into how value is conceptualized and priced in M&A where, for small- to mid-market targets there are two general frameworks:

Financial (Stand-alone) Valuation

• Valuations are based on normalized EBITDA (or free cash flow) and a small amount of growth/efficiency improvements.
• Comparables (public or private transactions) provide benchmark multiples (e.g. 5–6× EBITDA).
• The seller’s narrative is largely financial or numeric such as trailing performance, growth assumptions, margin expansion.
• Because multiples are relatively tight in efficient markets, there is limited room for deviation, and the process becomes a competition among bidders using similar valuation grids.
• The key driver to value is a competitive process, hoping that at least one of the buyers imputes some strategic value that they may pay at the higher end of the range of market multiples.

In markets where the business is commoditized, or where strategic synergies are minimal or opaque, financial valuation is usually the ceiling.

Strategic (Synergy-Driven) Valuation

Synergies are the rationale that justify paying above stand-alone multiples. They are the basis for the premium over a financial valuation. The stronger and more credible the synergy case, the higher the potential multiple. The most common elements include:

• Revenue Synergies: These are typically the most valuable, but not having been operators in the industry, are usually the hardest for most advisors to express (cross-sell, alliances, new markets, bundling or packaged offerings).
• Cost Synergies: These are usually fairly limited even if bringing G&A functions in-house post-close. (procurement leverage, shared services, overhead elimination).
• Operational / Process Improvement: Also valued and difficult to express to outsiders, but frequently targeted by sophisticated buyer integration teams (scale effects, technology integration).
• Financial Synergies: Outside of public buyers, these are not often evident to the seller (lower capital costs, tax optimization).

McKinsey’s empirical study of ~1,640 deals found that acquirers frequently paid premiums of 40%+ over target value, explicitly citing synergy rationale McKinsey & Company. Similarly, BCG’s Real Deal on M&A article says (large) acquiring firms paid on average a 34% premium over market value. (The larger target firms included in these studies are typically going to have more synergies available to the buyer, and public firms by their nature always require a premium over market capitalization to enact a transaction). Nevertheless, there are premium valuations to be had with the right combination of target firm and transaction approach (i.e. Advisor Design).

However, it should be noted that citing synergies as the reason for overpaying on a deal is a very real phenomenon and McKinsey also observed that many acquirers failed to deliver, because synergy projections were overstated or integration execution failed. BCG found that although executives frequently claim synergy benefits, empirical validation is elusive.

Academic studies on acquisition premia also reinforce that synergy expectations are a primary driver of premium. However, synergy-based value is not risk-free to the buyer and so the seller must defend, stress, and clearly articulate what these buyer-realistic synergies are. If the seller’s advisor does not push the burden of proof onto acquirer models, the strategic premium will be deeply discounted or even disallowed altogether. That said, buyers need to be compensated for the risk of paying for synergies so a reasonable discount is expected but if they synergies are large, and a credible integration plan is implemented, there should be enough value for all parties to be very happy with the premium valuation.

The Multiples Gap

While financial value is fairly predictable, strategic value is fluid. For the right buyer, valuations can soar. Multiples of 12 – 20x EBITDA or 4 – 5x revenue are absolutely achievable when synergies are real, clearly articulated and defended.

Buyers rarely pay for synergies unprompted. Advisors must be able to break buyers out of a financial mindset and show how acquiring your business enhances their growth. Without this, sellers leave millions on the table.

Sophisticated buyers seek out synergies, whether the seller’s team articulates them or not. An acquisition that opens doors in markets or clients that were previously unattainable means large buyers can significantly leverage this small synergy to the seller, into a large new revenue stream for the buyer. This scale is why buyers will pay premiums for truly strategic acquisitions if they must. A premium valuation is easily sensibly justified when the synergy is real and has scale. But the seller’s team does need to stake out a claim on what amounts to a relatively small piece of that increased value in order to capture a premium.

What Sellers Forfeit with a Purely Financial Approach

Choosing an Advisor who is limited to financial processes imposes implicit constraints. However, these are only of consequence for targets with a somewhat unique value proposition with owners who are seeking a premium valuation. Here are the main losses and risks:

• Value Compression: By not proactively highlighting strategic synergies, the process is anchored to market multiples.
• Anchoring Bias: Buyers naturally anchor on how the process frames value; if the seller never elevated the narrative, buyers won’t either, even if they can see the synergies themselves.
• Lost Upside: In differentiated businesses, the strategic premium may represent ½ to ⅓ of total deal value – enough to render concerns about higher retainers or longer processes meaningless.
• Process Rigidity: Financial auctions often force tight timetables and limit mid-course corrections. To get a strategic deal, advisors usually need to negotiate in a more flexible way to ensure the outcome benefits everyone.
• Negotiation Context: Without a narrative to defend, the buyer’s execution team will understandably erode value through purchase price adjustments, earnout pressure, or diligence re-pricing.
• Credibility Gap: A weak or generic CIM signals lack of conviction about value creation, undermining buyer confidence.

From a risk perspective, the financial-only approach effectively truncates the right tail of valuations. A buyer has no obligation whatsoever to pay for synergies that the seller’s team are oblivious to.

To see how this forfeited value arises consider a software and services company with $3M TTM EBITDA, growing 15% annually, with a repeatable product that is adjacent to larger acquirers’ offerings. The dynamics of the two transaction approaches can be seen as:

• Financial Process: Comparable multiples suggest 6 – 8× EBITDA, for an EV of $18 – 24M.
• Strategic Process: Suppose the advisor can credibly demonstrate $2M of synergy value per year or that this can be repositioned as a pure play SaaS business. A buyer may then justify 10 – 14× EBITDA or more, implying $30 – 42+M.

Thus, even at the low-end of this range, the Financial Advisor may cost the sellers $12M in foregone value, or conversely the Strategic Advisor creates 60% in uplift.

6. Selecting an Advisor (Advisor Design)

With this backdrop, it is clear that the process of selecting an Advisor must itself be strategic. Here is a possible decision framework for entrepreneurs contemplating an exit:

• Step 1: Diagnose Differentiation

  Does your business have unique attributes, high margin levers / scale, or expansion potential that a buyer can exploit? Does the business have a moat or IP that can be leveraged, or perhaps it has a proven wedge offering that a buyer could exploit upon acquisition.

  If the answer is “no,” the financial auction path may suffice and a Business Broker or Investment Bank approach is reasonable; if “yes,” you require strategic design and therefore Strategic Advisors who can think deeply in terms of strategic fit for your business.

• Step 2: Ask Candidates for the “Synergy Narrative Sample”

  Ask Advisors to propose how they would capture $x of strategic value (revenue synergy, cost levers). If they cannot sketch a credible path or refer to a “competitive process” they are likely constrained to a financial-only path.

  More broadly, assess whether your proposed deal team will take the time and effort required to capture strategic value on your behalf, or is your firm another volume deal for them.

• Step 3: Evaluate Process Flexibility & Buyer Targeting Capability

  Can the Advisor filter buyers by strategic fit (not just a mass distribution)? To do this the Advisor would first need to identify the target’s strategic attributes that a buyer could leverage. Can the deal team modify their process if unanticipated interest emerges or work with buyers to find a structure that balances buyer’s wariness about paying for synergies with realization of the clear strategic opportunity?

• Step 4: Evaluate Structural Incentives

  Does the fee structure allow the Advisor to get paid more if they extract higher multiples? Is there alignment in risk (e.g., retainer deducted from success fee, i.e. a setoff)? Does the advisor have the incentive to put a senior team on the deal in order to pursue a strategic valuation?

• Step 5: Model the Expected Value Trade-Off

  Simulate outcomes under Advisor pathways and layer on the associated fees to undertake those paths. Something along the lines of the following:

  

  Estimate the probability-weighted uplift of hiring the more capable advisor and compare that to the additional retainer cost.

• Step 6: Meet your Actual Deal Team

  The firm type does not matter anywhere near as much as the deal team you will be working with (i.e. not the sales-pitch team). Does this particular group of people align with your transaction goal and will they be able to get you there? Also important is to know who will be staking out the strategic positioning, writing the CIM and the level of active engagement by the most senior team members.

In effect, the seller must treat Advisor Design as part of pre-engagement due diligence. Because the transaction approach is so instrumental in determining valuation, the right team must be selected to pursue that goal.

Bravery Group and Advisor Design

Bravery Group is an M&A advisory firm led by a senior team with deep experience in digital marketing and software. Having managed P&Ls and built new businesses themselves, the team understands the real leverage points that drive value in an acquisition target.

Within deal team archetypes, Bravery is best positioned as a Strategic Advisor, though the firm also operates under the Investment Bank deal team archetype (while not being a bank itself). Importantly, Bravery does not act as a Business Broker.

Strategic Value Recognition

A key differentiator for Bravery is its ability to identify and articulate non-obvious sources of value. For example, in one transaction, the team recognized that a high volume of new business leads from a strictly capped number of authorized platform resellers was worth far more than a traditional financial valuation suggested. This insight guided clear and consistent messaging throughout the process, leading to a highly successful outcome for both buyer and seller.

Every acquisition target is unique. There is no single formula for value; each business has its own mix of strengths and weaknesses. Bravery excels at uncovering the real drivers of value by applying both broad business acumen and industry-specific expertise. This makes the firm particularly effective when sellers want to pursue a strategic approach.

However, not all acquisition candidates require deep strategic positioning. Bravery recognizes this and also runs straightforward financial processes when a target has only limited strategic angles to emphasize. This flexibility ensures that sellers receive the right approach for their situation.

Capturing strategic value often means enticing buyers to pay more than they initially intend. All buyers seek synergies in acquisitions, but they prefer to keep those potential gains to themselves. The key to unlocking some of that incremental value is to level the playing field – educating all prospective buyers about the target’s true leverage points.

Bravery specializes in this process, making hidden value visible and helping sellers secure stronger outcomes.

Why Work with Bravery Group

Sellers who want to maximize value need advisors who can think strategically, not just financially. Bravery Group helps uncover the real opportunities in a business, translate them into clear buyer messaging, and drive results that go beyond the numbers

7. To Conclude

Sellers need to know the type of acquisition they are pursuing and select their advisor and deal team accordingly. The overt retainer and success fees pale in comparison to the hidden cost of taking the wrong approach.

Choosing the right Advisor is not just a tactical step in selling a business, it is a strategic decision that can fundamentally shape the outcome. Sellers who align their goals with a deal team’s strengths unlock the potential for higher valuations, smoother processes, and stronger legacy outcomes. Conversely, misalignment risks leaving substantial value unrealized. By treating Advisor Design as a deliberate act of strategy, business owners ensure they capture not only the financial worth of their firm, but also the legacy and future impact they envision.

To learn more, you can reach the author, Paul Newton, Managing Partner, at paul.newton@bravery.group