NASAA Redefines Legal Usage of “M&A Advisor” – Here’s What You Should Do

The North American Securities Administrators Association (NASAA) has thrown a curveball for M&A advisors – who may not be able to call themselves that anymore.

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The term has long-served as the universal calling card for dealmakers, with or without a license. Usage of the term has been supported by the M&A Broker Exemption, which was introduced by the Securities Exchange Act. In the past, the exemption has allowed private capital professionals without broker-dealer or registered investment advisor credentials to market their services.

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However, the M&A Broker Exemption does not supersede state laws. While the NASAA technically has no direct authority, states typically pull from the guidance of their Model Rules, which now outline that using the term “advisor” or “adviser” without proper licensure could be considered misleading or deceptive.

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This is a big deal. The state-specific rules could create a regulatory minefield, as dealmakers may not be advertising their services within a single state. While still federally-supported, dealmakers could face fines or other punishments for using the terminology at the state level.

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So what should you do? There are a few steps we’re advising our partner bankers and independent dealmakers to take: 

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• First off, using the term “M&A consultant,” “transaction specialist, or just “dealmaker” can accomplish the same goal without introducing the regulatory risks of “M&A advisor”.

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• Peruse current marketing materials – from your website, LinkedIn page, pitch decks, or even email signature – to comb for any usage of the term “advisor” or “adviser”.

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• Keep an eye on any changes in individual state regulations, that’s where the risk is introduced. But it’s better to be safe than sorry, and assume a conservative posture.

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• Consult your broker-dealer’s supervisory framework or legal counsel if in doubt.

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Ultimately, the risk may not be worth the reward when it comes to using the term “advisor” for those operating without the correct licensure. In the world of private markets, reputation and regulatory standing walk side-by-side. While it may seem like a minor semantics issue, it can create real problems.

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At Finalis, regulatory compliance is our top priority, and we advise caution when using this terminology moving forward.