What you pay your banker to do and what determines the size of your closing wire are two different jobs.

TL;DR: The banker is paid to close a transaction. The lawyer is paid to draft documents. Neither is paid to design the structure, narrative, or tax architecture that determines how much of the closing wire you actually keep. That seat is the strategy seat, and in most lower-middle-market sales nobody fills it. The silent seven-figure cost shows up after the wire hits.

What you pay your banker to do and what determines the size of your closing wire are two different jobs.

When founders prepare to sell, the first big move is usually hiring an investment bank.

If the deal is large enough, $100M or more, they hire one of the boutiques: Houlihan Lokey, William Blair, Raymond James, Piper Sandler.

For smaller deals they hire a business broker or a lower-middle-market bank. Capstone Partners. BDO Capital Advisors. Brown Gibbons Lang. TM Capital.

The names change. The pitch doesn't.

These firms run a "process." They build the CIM (Confidential Information Memorandum). They map the buyer universe. They quarterback the outreach, work the IOIs (Indications of Interest), and move the best-qualified bidders toward an LOI (Letter of Intent).

The founder, having signed the engagement letter and watched the retainer leave the account, exhales. Someone is now on their side.

That part is half-true.

The banker is on your side. The banker is also focused on earning the fee, which is paid for closing the transaction, not for maximizing what you net from it.

Those are not the same thing.

Read the engagement letter carefully. The scope is narrower than the price tag suggests.

Top mid-market banks deliver process, positioning, outreach, auction management, LOI negotiation, and close coordination. That is a real service and worth paying for.

On a $20M transaction the all-in cost, retainer plus the standard tapered success fee, runs $450,000 to $850,000 depending on the bank and structure. On a $50M deal the fee can easily cross $1.3M.

The same engagement letter explicitly disclaims most of what determines how much you actually keep.

Tax and estate structuring is referred to your accountant and tax advisor.

Post-close earnout disputes are not the banker's problem.

Reps and warranty insurance is brokered elsewhere.

Outcome and timing are "efforts-only."

Deal structures are not particularly creative. The banker is not designing your post-exit life around the deal. The banker is closing a transaction.

The wording of the MAE (Material Adverse Effect) clause. The survival period on indemnity. The carve-outs that make it from LOI into definitive. Whether to run a combined or sum-of-the-parts deal. Earnout vs. CVR (Contingent Value Right).

Those are handled by your transaction counsel, who is paid to execute documents, not to design strategy.

This is not a complaint about bankers. They are doing the job they are paid to do, with the discipline you would expect at that fee.

The misunderstanding sits on the founder's side.

The founder assumed the banker's seat was the strategy seat. It isn't. And in most sales, no one fills the strategy seat at all.

The strategy seat looks like this.

Someone whose job is to identify every flaw in the business before the buyer does, and to write the rationale around each one. Same words. Every bidder. Every call.

Someone who builds a real valuation framework: Floor, Target, Stretch, tied to structural facts about the business and the specific bidder set. Not the generic auction-clearing range an associate pulled from a database.

Someone who pulls the actual comps and reads them against your entity structure and probable buyer pool, so when a bidder pushes back on multiple, the answer isn't "the market says."

Someone who background-checks each IOI bidder, identifies the bidder's investment thesis and constraints, and matches the messaging one-for-one to what their investment committee or board will actually approve.

Someone who, before the LOIs come in, drafts the internal memo each bidder's deal team will write to justify their bid. So you know the case being made on the other side of the table before the number lands.

And someone who structures the tax architecture before the deal shape is locked.

On a recent two-entity transaction I worked, the same business, sold to the same buyer, in the same week, moved from a $9M headline price to a $17M headline price. The difference was allocation, structure, and which entity carried which value.

The banker had no opinion on it. The accountant flagged the issue after the LOI was already negotiated.

By then it wasn't structure. It was a renegotiation.

That is the work nobody on the standard sell-side team is paid to do. It exists in the gap between the banker, the lawyer, and the accountant, and it does not fill itself.

It is why every seller needs an exit advisor on the team.

Ideally before the banker, the attorney, or any of the other exit professionals are retained. Frequently, the advisor's negotiation of the rest of the deal team's fees alone saves seven figures.

When the seat is empty, three things happen.

The narrative each bidder hears varies from call to call, and the story the founder thinks they are telling is not the story being heard.

The LOI arrives with terms that are technically standard but structurally hostile. Unspecified working capital pegs. Broad MAE clauses. Indemnity that survives forever. Retention dressed up as an earnout. Tax-inefficient structures.

And the after-tax math, which the founder only models seriously after the deal is signed, comes in below expectation. Because allocation, timing, and entity structure were treated as accounting questions instead of negotiation levers.

None of these is catastrophic alone. Together, they routinely cost a founder seven figures in net proceeds on a typical lower-middle-market sale.

A current example. I came onto a professional services deal after the client had already signed an engagement letter with one of the major banks.

No bake-off. Banker selected on reputation. The client had negotiated some real concessions inside the engagement, and on the surface the agreement looked like a fair deal.

A close read said otherwise.

There was approximately $1.3M of additional banker fees recoverable across three specific terms. None of which the client had been positioned to push back on, because nobody on their side was reading the engagement letter as a negotiation.

Legal counsel's engagement, run through the same process, was inflated by another $500K.

That is $1.8M, before the deal even opens. Before the CIM is drafted. Before a single bidder has been contacted.

Money the seller would have paid quietly, out of the closing wire, never noticing it left.

And that is just the fee layer. The LOI-stage and tax-architecture costs run on top.

Quietly. After the wire hits. After the celebration. Never recovered.

Hiring a top banker and running a full process is necessary for the seller to realize maximum valuation. It is not sufficient.

The banker is who you pay to run the process.

The number you keep from the closing wire is determined by who is sitting in the strategy seat, and whether anyone is sitting there at all.

Sophisticated founders do not assume the seat is filled because the bank's logo is on the engagement letter. They fill it deliberately.

The point of an exit is not to run a clean process.

It is to maximize the closing wire while simultaneously achieving the goals that don't show up in the LOI.

Legacy. Taking care of existing employees. Funding post-exit philanthropy. Estate planning. Determining whether you want any post-exit role with the company. Ensuring your non-compete leaves you free to pursue what comes next.

Those are different jobs.

Hire for both.

— Roland

P.S. Coming soon: what actually happens in the strategy seat. Six things that get done before the LOIs land, none of them tactical, all of them worth significantly more than the fee.

You probably don’t need a CEO.

You might just need someone to take things off your plate.

A lot of founders jump straight to hiring “big titles” without getting clear on what problem they’re actually trying to solve.

Are you trying to step away completely… or just offload the parts you don’t want to handle?

Those are two very different decisions, with very different hires.

Want to see how to hire the right role (not just the right title)? Watch the video below.