Is My Company Too Small for an Investment Bank?

An investment bank considers a company too small when the fee it expects to earn won’t cover the work a sale requires. That judgment reflects the bank’s economics. It says nothing about whether your business is valuable or sellable.

If you’ve been told your company is too small for an investment bank, you still have options: a business broker, a boutique M&A advisor, a sale you run yourself with expert support or time-based advice that doesn’t depend on a deal closing. The right path depends on your company’s size, the deal’s complexity and the size of the market, among other factors.

Why investment banks turn down smaller companies

Success fees (commissions paid when a deal closes) are the way most middle-market merger advisors earn the bulk of their revenue. That model makes sense for large deals that are likely to close. Smaller, less certain deals strain it in three ways.

The percentage math. Advisors in the Firmex US M&A Fee Guide 2023-24 quoted an average success fee of 6.3% on a $5 million transaction. That works out to about $315,000. In our experience, a sale takes 10 to 12 months on average when nothing unexpected gets in the way, and an investment bank has to staff the deal for the entire period.

Minimum fees. Three-fourths of middle-market advisors charge a minimum success fee to protect their costs, and many have been raising those minimums. A minimum that would take too large a share of a smaller sale gives the bank and the owner both a reason to walk away.

Closing risk. According to 59% of advisors, the uncertainty of closing is an important factor in setting a success fee. A bank that earns nothing on a deal that falls apart has to avoid deals that look fragile. The Exit Planning Institute reports that only 20% to 30% of businesses that go to market sell, so banks screen hard.

What too small for an investment bank means in dollars

Each bank sets its own threshold through its minimum fee and the deals it wants to spend time on.

The International Business Brokers Association and M&A Source divide the market into Main Street businesses, valued at up to $2 million, and the lower middle market, valued between $2 million and $50 million. Business brokers focus on listing and marketing smaller businesses. Boutique investment banks and M&A advisors work in the lower middle market, and each firm sets its own floor inside that range.

Oaklyn Consulting works with companies valued below $50 million, often well below, and we have no minimum deal size.

Size is one of several reasons a bank declines. Banks also pass on uncertain deals, where the owner hasn’t decided to sell, and on complicated ones, where family members, board members or investors disagree. A larger company with a divided board can be as hard to place as a small one.

Your options when you’re too small for an investment bank

You have more options than a bank’s answer suggests. Here are some of the most common situations and strategies.

Hire a business broker

A business broker lists your company for sale, markets it to buyers and earns a commission at closing. Brokers focus on completing transactions generated from listings, which makes them a good fit for smaller, simpler sales when you’ve already decided to sell.

Find a boutique M&A advisor

Smaller investment banks and M&A advisors work in the lower middle market, and their minimums differ from firm to firm. Ask each one what size and type of deal it prefers. Our list of questions to ask an investment banker includes the one owners skip most: whether the banker likes working with companies like yours.

Run your own sale with expert support

Some owners know their likely buyers and want to run the sale themselves. That works best with an advisor who can analyze bids and counsel you through negotiation. The owner of a distribution company with $15 million to $20 million in sales took this route after finding he couldn’t engage a traditional M&A boutique because of his company’s size. Oaklyn Consulting supported his self-directed process with bid analysis, limited market outreach and background counsel, and a private equity fund bought the company. The full story is in our distribution company case study.

Use hourly investment banking advice

Hourly advice removes the fee math that makes a small deal uneconomic for a bank. You pay for time, so the advisor has no minimum to protect and no reason to push a deal that shouldn’t close. We explain where that model helps most in how our time-based billing approach works.

Prepare before you sell

Some owners hear “too small” from a bank for good reason: Their company just isn’t ready for market. With only 20% to 30% of businesses that go to market selling, the best next step for many owners is preparing the business for a future sale, potentially years in the future.

Ask the bank that turned you down for a referral

A bank that declines your deal often knows who can help. Many investment bankers keep referral partners for the deals their model doesn’t fit.

The distribution company above came to Oaklyn Consulting through a referral from a boutique investment bank. In another case, a bank’s investment banking department introduced us to a doctor and her husband whose business sat below the bank’s $40 million threshold, and the business sold for more than 10 times its earnings. We tell that story in how we helped a regional bank serve clients below its threshold.

Frequently asked questions

What is the minimum deal size for an investment bank?

No industry-wide minimum exists, and each investment bank sets its own, most often through a minimum success fee. Three-quarters of middle-market advisors charge a minimum success fee. Oaklyn Consulting has no minimum deal size.

Should I use a business broker if my company is too small for an investment bank?

A business broker fits a smaller, simpler sale when you’ve decided to sell and a listing will reach qualified buyers. If you haven’t decided, or the deal involves disagreements among owners or investors, get advice on the decision before you list. The International Business Brokers Association treats businesses valued at up to $2 million as Main Street businesses, a useful reference point.

How much does it cost to sell a small business?

Success-fee advisors quoted an average fee of 6.3% on a $5 million transaction, and three-quarters also charge an engagement fee. A minimum success fee can raise the effective percentage on a smaller deal. An hourly engagement costs what the work requires, which depends on the scope you choose.

Can a company worth less than $5 million get investment banking advice?

Yes. A company that’s too small for an investment bank can still hire a business broker, a boutique advisor or an hourly investment banking firm. Oaklyn Consulting has no minimum deal size and works with companies whose deals don’t fit the traditional investment banking model.

Will a bank refer my company to another advisor?

Often, yes. Investment banks see more deals than they can take, and many refer the ones outside their criteria to advisors they trust. Asking costs you nothing and can connect you with an advisor the bank already knows.

So what now?

Being too small for an investment bank just means you don’t fit that bank’s business model. Your company’s value is a separate question. Decide first whether you want to sell, then choose the advisor whose model fits your deal’s size and complexity. If you run a founder- or family-owned company, our page for founder and family-owned businesses explains how we help.

Talk with us

If a bank has told you your company is too small, request a consultation. We’ll look at your situation and tell you which path fits, including when that path leads to another advisor.

References

Firmex, US M&A Fee Guide 2023-24: success fees by deal size, minimum success fees, engagement fees and the factors advisors weigh when setting fees, from 189 US respondents.
IBBA and M&A Source, Market Pulse Q4 2025 survey results: definitions of the Main Street and lower middle market segments.
Exit Planning Institute, State of Owner Readiness: the share of businesses that go to market and sell.

About this piece

Oaklyn Consulting is an investment banking advisory firm in Chattanooga, Tennessee, founded by Frank Williamson in 2016. The firm has worked with more than 200 clients on mergers, acquisitions, capital raises and recapitalizations, acting as consultants on a time-based billing model with no success fees.

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Oaklyn Consulting brought senior-level attention and analytical rigor to every stage of the process. They understood my business, ran a thoughtful and disciplined sale process and helped me make sound decisions when it mattered. I couldn't have asked for a better team in my corner.”

Jarod BuschFounder, 911 Custom LLC

(If) you've never been through this before, you've never done it before, frankly you're out of your depth and you're lost, you need someone that's going to pilot this through with you, as sort of the copilot, and your mentor and advisor. I absolutely feel very strongly that that's the role that Oaklyn Consulting played for me, and I would always recommend them.”

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Oaklyn Consulting did a great job for us on Axial. The unfortunate outcome there had everything to do with the company's situation and the market environment. The board and investors all agree on what a thorough, professional, top-notch job Oaklyn Consulting did for us. I wouldn't hesitate to work with them again and in fact will look for opportunities to do so.”

Board MemberAxial Exchange

That was the real value of Oaklyn Consulting, being able to add them to the deal midstream. If you’re in that situation, I think Oaklyn Consulting is a great fit.”

Mike WalshCEO, Essco Calibration Laboratory

If you’re on the fence, I would say meet Frank and his team. I would recommend him to anyone who is considering selling their company, even if they’re just exploring their options.”

Al HemondCEO, Professional Disability Associates

Without him, I wouldn’t have gotten these deals done. There’s no question in my mind.”

Janet ElkinCEO, IMN Enterprises

Eighty years of family history does not get sold in a hurry. Oaklyn Consulting understood that from the first conversation.”

Jamie SemprebonCalmont Beverage

Oaklyn Consulting told us to pause when everything in me wanted to keep moving. Six weeks later, we closed clean. That advice was worth more than the process itself.”

Jeremy GrenierCEO, Calmont Beverage

I know they had other clients, but we felt almost like we were their only one at the time just by how much attention they paid to us. They’ve got a good team that can walk you through the process step by step, and they’re going to give you the attention you deserve.”

Devan WelchSenior VP and General Manager, Powell Construction

We really appreciated your willingness to adapt to the unique nature of our engagement — i.e., advising both sides — rather than forcing us into a typical approach.”

It was a very helpful professional experience. You are very knowledgeable and explained how you work transparently, even offering that you were probably not a good match. That is rare. Most people try to force-fit their model to every opportunity.”

As I stated many times during our conversations, I so appreciate you and your team for interceding throughout this transaction. It made such an incredible difference!”

Excellent setup and organization of data as well as business-level guidance for transactions.”

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