A key to success in mergers and acquisitions (M&A) is adaptability. Many M&A leaders adjust their playbooks to meet current macroeconomic conditions, whether those conditions are bolstering or challenging their business. In 2024, advisors were held in limbo, waiting for election results in multiple countries and monitoring climbing interest rates. After the elections were decided, there was initial optimism that deregulation in the United States would usher in a surge of M&A activity. Complications arose when tariff increases were introduced, causing a chain of reactions resulting in global instability. Cross-border transactions and the supply chain industry had the potential to be the most disrupted, but caution arose across the board, with 57% of CEOs delaying a planned investment due to current conditions, and 22% stopping an investment altogether.
It’s not all delays and disappointments, however. While deal value and activity dipped when tariffs were introduced, deal values have since bounced back. Private equity has become a strong presence, supporting deals and buying out distressed assets. A report conducted by Firmex in late 2024 found that private equity or other financial buyers were dominating the market, with 73% of advisors seeing them frequently. With growing backlogs of portfolio companies and high levels of dry powder, private equity firms will continue to be a force in the market in 2025.
Where does that leave advisors now? Navigating economic and geopolitical uncertainty, but maintaining the bullishness and persistence that firms have demonstrated throughout other market disruptions that have occurred over the last few decades. Whether during pandemic lows, tariff complications, or other economic disruptions, advisors have had to consistently pivot their strategies to support their business. In the newest M&A Fee Guide and Focus reports from our team at Firmex, those strategies are unpacked in practical observations on engagement fees, advisory firm performance, and planning for 2025. While these observations are timely, they are also continually relevant in how they reflect the ability of firms to keep pushing ahead, no matter what they encounter on the way.
How did firms navigate the uncertainty of 2024?
According to the survey for our team’s 2024-2025 M&A Fee Guide, over a third of advisors raised at least one type of fee in 2024. That’s less than in 2023, but only by a small margin. Many firms noted that they did change their fee structures in 2023, moving from one-time fees to periodic engagement fees, and thus wanted to hold off on changes in 2024. The increases that did occur were intended to balance inflation with client expectations, while also being aware of the value of the services they provide.
Of the various fee structures, hourly and fixed fees were raised the most. Monthly fees, which were the most commonly charged fees in 2024, came in third. Regarding the popularity of the structure, an investment banker in Germany noted that, “A monthly retainer recognizes the expertise required to deal effectively with professional challenges.”
Periodic engagement fees grew in popularity over 2023, and that trend continued in 2024. Advisors said that periodic fees ensure both client and team commitment, are easy for clients to understand, and are more stable for covering costs in an unstable environment. Milestone fees, while raised the least in 2024, saw the largest increase in use. 13% of advisors surveyed now use milestone fees, compared to 10% in 2023. Advisors said these fees are beneficial for clients, as they like having tangible results, and one noted that milestone fees motivate advisory firms to stay on target.
Interestingly, some advisors reported that client pressure to cut fees was about the same in 2024 as it was in 2023. When pushback did occur, some firms chose to firmly hold the line, while others offered concessions to their clients. One such concession, deducting engagement fees from success fees, did gain some popularity in 2024, demonstrating how firms are willing to be flexible for their clients.
“For bigger deals, we’re open to flexible fee structures to help address seller concerns,” said Eric Seifert, the founder and managing partner of Good Hope Advisors in the United States. “But smaller deals can take just as much – if not more – time and effort, so we have to be thoughtful about structuring fees in a way that makes sense given the deal size, seller expectations, and our confidence in closing.”
Whether firms were being firm or flexible, more than half reported revenue increases over 2024, an improvement from 2023. Advisors are also expecting those increases to continue. In the latest Firmex Focus report, 74% of advisors surveyed said they’re expecting revenue increases by the end of 2025.
When asked how advisors achieved revenue increases, they said that their business was most positively affected by factors they control themselves, such as increased marketing efforts and organic networking.
“We are directly contacting potential clients,” said Marc Feyen, the managing director of Pandion Partners S.L. in Belgium. “When you connect with people and understand their goals, you come across as a specialist.”
Many advisors got creative with their marketing efforts by producing YouTube videos, hosting network events, or setting up press releases. All of these marketing channels were employed by firms to establish a firm presence in the market. While visibility may sound simplistic, it can be one of the most important marketing strategies. If a client thinks of an M&A firm, who immediately comes to mind? Did they recently see a press release highlighting some successful deals? Did they come across an eye-catching post on social media highlighting a firm’s work?
“Nothing beats good old-fashioned networking with people who are in a position to send you business,” said the head of a firm in the United States. “We have spent a lot of time and money looking for the easy button, and I don’t think it exists.”
Many advisors cited human connection as a positive force for success, from networking events to referrals from past clients. Half of the advisors surveyed also said they frequently worked with their past clients.
2024 was a difficult year, but many advisors were able to navigate the economic and political challenges to push through to success. In our newest Firmex Focus report, we learned that more firms saw profits increase last year than decrease. Smaller firms showed significant growth, with both positive profits and increased headcounts. However, we also saw gains at larger firms, with more than half surveyed for our 2024-2025 M&A Fee Guide reporting revenue increases.
Looking ahead, what will firms do to maintain this momentum? Will they continue to employ the same tactics in ongoing economic instability?
Moving ahead, making plans
At the start of this year, 37% of advisors surveyed for our 2024-2025 M&A Fee Guide said they would raise at least one type of fee in 2025. For some advisors, this was because they were already seeing client volume pick up. For others, they’re exercising more creativity with fee raises, from raising the upfront retainer but maintaining success fees, to only raising fees for new clients.
One advisor noted that their firm will raise its fees proportionally to successfully closed deals, which in turn will bolster their reputation and client recommendations.
In terms of increasing successful closes and revenue, advisors said their top priority is to improve their execution by being more disciplined in their operations and selecting deals they’re confident will close. Many advisors are also leveraging new AI technology for processes such as deal sourcing. While much of the technology is new, advisors are already discovering ways to integrate it into their workflows.
Using new tools to boost efficiency will help some firms lower their costs, as many are examining ways to streamline their processes. “Our business is performance-based,” said Kevin Astle, the founder and managing partner of Multivisory International in Canada, “with limited unnecessary expense, and increased remote work.”
One area where many advisors are looking to invest is in their marketing efforts. Expanding marketing will continue to be a priority in 2025, as it was in 2024. Advisors plan to continue promoting their work across multiple channels, including social media and press releases. There will also be efforts to cold-call potential clients, bringing in the element of human connection that advisors attributed plenty of success to in 2024. Michael Murzyn, the director of MM Partners in the United States, said that, “We’re expanding our marketing efforts to local accounting and law firms.”
Using marketing efforts to obtain new clients is one priority, but another is investing time and resources in client retention. As we saw from the Firmex Focus report, many firms received referrals from past clients and even continue to work with them regularly. Maintaining those relationships will be crucial for increasing business in the future.
Finding the right strategy for your firm
Economic headwinds can shift quickly. Whether affected by political instability, supply chain delays, or other global factors, there is always a chance that the macroeconomic environment will change, either favorably or unfavorably.
Expert M&A advisors know this, and know that they need to be agile and proactive in order to adapt their playbooks to current environments. As revealed in the latest Fee Guide and Focus report from Firmex, this adaptability can be implemented through updating fee structures, responding to client pushback with flexibility, investing in more extensive marketing, or networking organically.
No single strategy can be applied to every firm in every country. Adaptability requires advisors to know their market well and have a practical view of their business. Sometimes, concessions can be made, such as halting headcount growth or switching to period engagement fees, knowing that deals currently take longer to close. It’s about balancing the firm’s needs with the market’s reality to maintain profitability.
The last few years have been challenging for M&A, but advisors consistently proved themselves to be motivated in the face of economic disruptions and strategic with their businesses. Soon, economic headwinds may shift again, bringing with them new benefits and challenges. What we have learned in speaking to advisors here at Firmex is that, no matter what those headwinds bring, they will be ready to push through.