Mercury vs Relay: Banking for an M&A Advisory Boutique

The single biggest planning mistake a boutique can make is treating the month a success fee lands as representative of ongoing cash flow. Route success fees into a dedicated account the moment they clear, separate from the operating account that funds payroll and rent, and release funds to distributions and reinvestment on a planned schedule rather than all at once. Relay's free sub-accounts make this structurally easy; the discipline of actually following the plan once the money lands is the harder part, and that's a governance decision the firm has to commit to, not something either bank enforces for you.

Boutiques that also run advisory retainers alongside deal work have an advantage here: use retainer revenue to cover the operating floor, payroll, rent, basic overhead, and treat success fees as genuinely discretionary once they land, for reinvestment, distributions or building a longer runway. A boutique with no retainer base at all, purely dependent on closed deals to fund payroll, is carrying real risk that no account structure can fully offset, and is worth addressing directly, by adding retainer or advisory work, rather than managed around indefinitely.

A firm holding a large success fee before it's fully distributed is sitting on cash that should be earning something in the meantime. The 10-year Treasury yield is at 4.44%¹, a reasonable reference for what conservative, liquid cash should be earning during a holding period rather than sitting flat. Mercury's automated Treasury sweep captures yield near current short-duration rates on cash above your operating buffer, which fits a success fee holding period well: money that needs to stay liquid but isn't touched for a planned stretch before distribution.

A boutique bridging a long stretch between closed deals with a line of credit is borrowing at a cost tied to the bank prime rate, currently 6.75%². Given how genuinely unpredictable deal timing is in this business, size your operating reserve against a realistically long dry stretch, longer than you expect, rather than assuming the next deal will close on the timeline the pipeline currently suggests, since M&A timelines slip more often than they accelerate.

Some boutiques run a separate entity for advisory fee income versus any principal investment or co-investment activity alongside deals, which changes the account structure question meaningfully. Mercury's multi-entity architecture and API suit a firm in that position better than Relay's simpler structure does, particularly once there's any internal finance staff who'd build reporting across entities rather than checking each one manually.

M&A work carries a heightened confidentiality expectation, and that extends to who has visibility into the firm's own banking, since account activity can sometimes hint at deal timing or size even without explicit details. Whichever platform you choose, use role-based access deliberately: give an outside bookkeeper or accountant only the access they actually need, and review who has standing access to the account periodically rather than leaving it static as staff and outside relationships change over time.

Decide now, before the next success fee lands, what share gets distributed immediately, what share funds reinvestment, and what share builds a longer operating reserve, so that decision isn't made under the emotional pull of a large number suddenly landing in the account. Confirm whether your firm needs a multi-entity structure for any principal investment activity. And set the operating reserve target against a realistically long dry stretch between deals, not an optimistic one.

Before you set up either account, settle these decisions:

• Decide before the next success fee lands what share is distributed immediately, what share funds reinvestment and what share builds a longer operating reserve.
• Route each success fee into a dedicated account as soon as it clears, separate from the operating account that funds payroll and rent.
• Fund payroll and overhead from retainer revenue, and treat success fees as discretionary once they arrive.
• Use role-based access so account activity does not hint at deal timing or size to people who do not need that visibility.

Few professional services businesses see the extremes this one does: a boutique can go from a lean, cautious cash position to holding a fee worth several years of overhead in a single closing, and back to lean again within a year. That swing is exactly what tempts a firm to loosen spending discipline right after a big close, hiring ahead of a pipeline that hasn't materialized yet, or increasing distributions to a level the next dry stretch can't sustain. A written policy on reserve targets and distribution timing, agreed on by the partners when cash is calm rather than negotiated in the moment a fee lands, is the single best protection against that swing turning into a real problem two or three quarters later.