2018 M&A Research Cost Comparison

Gabe Galvez

To stay competitive many firms are investing heavily in back office resources in the form of research tooling and skilled labor – but even in a frothy market, these fixed costs can be hard to manage in the volatile world of M&A.

The firm

Regional, 3 Managing Directors, industry agnostic M&A firm operating in Texas and surrounding areas.  The firm has been in business 15 years and takes on approx 14 client engagements each year.

The need

Each MD is required to generate their own deal flow and manage the clients they bring to the firm.  That said, they have less time to manage the deal prep and back office functions. These back office needs include: Prospect list compilation, buyer research, occasional financial modeling, industry reporting etc.

Internal costs

Historically, the firm has handled research in-house, carrying the following expenses:

  • 1 seat enterprise data tool – 2.5k per month +
  • 1 research analyst with 4 years of experience – 5k per month base + incentive and benefits
  • Training, equipment, and overhead costs

Fully loaded, the example firm has paid as much as $102k per year to support its back office needs.

Pros?

  • Opportunity to grow internal talent base

Cons?

  • Long term commitment to costs leaves little flexibility
  • The firm spends money on training up employees only to have them leave a few years later
  • Access to only 1 data source
  • To scale, the firm must hire more analysts and buy more tools

CAPTARGET costs

  • $2500 per month, committed on a month to month basis

At this price point we provide the labor and the data access needed to fulfill any middle market M&A back office request.

Pros?

  • Short term commitment basis – total flexibility
  • Ability to scale up and down without disrupting your day to day processes
  • Access to more data tooling
  • Low turnover means you are not constantly working with new analysts

Cons?

  • Managing remote work involves some effort from Managing Directors, but at an 80% savings the cost of this involvement is nominal

Take the next step to using CAPTARGET’s services for M&A teams here: On-demand analysts for middle market M&A firms.

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