When selling a UK SME, you can engage a corporate finance adviser (a "broker") to run a structured sale process, or you can negotiate directly with one or more identified acquirers. Brokers maximise competitive tension and price. Direct deals are faster and less disruptive but typically result in a lower price.

Most UK SMEs over £2M EBITDA benefit from a broker; many under £1M EBITDA find direct deals more practical. The right answer depends on price ambitions, time pressure, and how identifiable the right buyer is.

What a broker actually does

A UK corporate finance adviser running an SME sale typically:

1. Prepares the business for sale — financial cleanup, building the deal narrative, preparing the data room.
2. Identifies the buyer universe — typically 20-50 potential buyers across strategic acquirers, PE houses, and adjacent industry players.
3. Approaches buyers under NDA — typically with a "teaser" first, then an Information Memorandum once interest is confirmed.
4. Runs the bidding process — first round of indicative bids, then a shortlist, then due diligence and final binding offers.
5. Negotiates the deal terms with the chosen buyer — price, structure, warranties, earn-out.
6. Project-manages to completion through legal documentation, regulatory clearance, and signing.

The process typically runs 6-12 months end-to-end.

Broker fees

Three components typical for a UK SME mandate:

• Monthly retainer: £3K-£15K/month during the engagement (4-9 months).
• Success fee: 1-3% of deal value, typically with a minimum (e.g. £100K minimum on a sub-£5M deal).
• Outcome scaling: higher percentage above target value, lower below.

For a £5M deal, typical broker fees: £150-£250K total. For a £15M deal: £300-£600K.

When a broker is worth it

Higher deal value

A structured competitive process with 4-8 credible bidders typically lifts the final price by 15-30% vs a direct deal with a single buyer. On a £5M business that''s £750K-£1.5M of additional value — far more than the broker fee.

Better deal terms

Competitive tension also produces better non-price terms — lower escrow, fewer warranties, shorter earn-outs. Direct deals with no competing offer give the buyer pricing AND terms power.

Buyer identification

A broker''s network is typically much wider than the seller''s. They know which PE houses are active, which strategic acquirers are likely buyers, and who is currently building in your sector.

Process discipline

The broker shields the seller from the day-to-day deal mechanics so the seller can keep running the business. A founder running their own deal often takes their eye off operations during the sale, causing performance to slip mid-process.

Negotiation expertise

Brokers do dozens of deals. Sellers do one. The negotiation tradecraft (when to push back, what to concede, what''s standard, what''s aggressive) matters in the final 5-10% of the deal value.

When direct is better

Very small deals

Below ~£500K EBITDA, broker fees become a significant percentage of value. Direct deals or brokers who specialise in micro-SME sales (and charge different fee structures) are more appropriate.

Obvious single buyer

Sometimes there is one clear best buyer — a major customer wants to bring you in-house, a known competitor has explicitly approached you, an investor in your space has been signalling for years. In those cases, the broker''s value is reduced (you found the buyer; competitive tension is harder to manufacture).

Time pressure

Brokers run 6-12 month processes. If you need a deal closed in 90 days (typically a personal or family reason), a direct deal with a known buyer is faster.

Confidentiality constraints

Broker processes inevitably involve more parties seeing the information memorandum (5-15 NDAs typical). If confidentiality is paramount — particularly in small industries where word travels — a tightly-controlled direct negotiation is safer.

The hybrid approach: limited broker, narrow process

Some UK SME sales use a middle path: engage a broker to run a tightly-controlled "limited auction" with 3-5 pre-identified, high-credibility buyers, rather than a wide market process.

• Faster than a full process (3-6 months).
• More controlled (less leakage).
• Less competitive tension than a full process (smaller buyer pool).

This works when the buyer universe is genuinely narrow (specialist niche industries) or where confidentiality is paramount.

How to pick a broker

For UK SMEs, the relevant criteria:

• Sector experience — has the firm done deals in your sector recently? Specifically.
• Size band experience — sub-£5M deals are different from £20M+ deals. The same firm rarely does both well.
• Cultural fit — you''ll spend 6-12 months working closely. Compatibility matters.
• References — talk to 2-3 founders the firm has represented in the last 24 months. What was the experience like? How accurate was the initial valuation guidance?
• Fees and incentives — the success fee should be structured to align — bigger payout above a target valuation, not just a flat percentage.

Avoid:

• Brokers who promise specific high valuations to win the mandate, then walk you down later.
• Brokers without specific recent transactions in your sector size band.
• Brokers who pressure for quick decision on engagement.
• Pure online "sell your business" platforms with no advisory layer — they''re really listing services, not brokers.

What to do if you''re sub-£500K EBITDA

The standard UK SME broker market is tougher to access for very small businesses. Options:

• Online listings (Daltons Business, BusinessesForSale, Rightbiz) — works for small retail / leisure / trade businesses. Limited for service businesses.
• Industry-specific brokers — many niches have specialist brokers (accountancy practice brokers, IFA practice brokers, dental practice brokers, etc.).
• Direct outreach to known consolidators in your industry.
• Sell to a competitor or partner through direct conversations.

What to do this month

If you''re thinking about selling in the next 12-24 months:

• Have an initial conversation with 2-3 corporate finance advisers. Most offer free initial discussions of 60-90 minutes covering: realistic valuation range, what would lift it, timeline, and their fee model.
• Decide based on the conversations whether a broker-run process feels right or whether direct conversations with known potential buyers would be more practical.
• If using a broker: agree the engagement letter carefully. Pay particular attention to: success fee threshold, retainer structure, what happens if the deal doesn''t close, the broker''s defined scope.