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Business Journal staff writer Brandt Brereton likes making mountains out of molehills-helping little companies become part of bigger ones. Mr. Brereton and his partner and father, Bill Brereton, run Brereton and Co., a private San Jose investment banking consulting firm specializing in mergers and acquisitions. Merger and acquisitions have become big business these days as companies seek larger market shares and business owners search for retirement exits. Wall Street is also applying pressure to increase earnings by building or buying out companies, Mr. Brereton said. But most of the deals are on the extreme ends of the revenue spectrum. Investment banks generally handle acquisitions valued at more than $20 million and business brokers go up to roughly $3 million, Mr. Brereton said. Left nearly untouched are the businesses in between. That's where Brereton and Co. has stepped in and built its early success. Since the launch of the company about 18 months ago, the firm has completed three transactions with a combined value of $25 million. Using the "double Lehman index" as its fee structure, Brereton and Co. is already showing a profit. The Lehman index, named after its developer, Lehman Bros., a New York investment bank, charges 10 percent on the first $2 million of the value of the transaction, 5 percent on the second $2 million, 4 percent on the next $2 million, and then 3, 2, and 1 percent for each of the following $2 million increments. Mr. Brereton said that the firm will also finalize stock deals, depending on the companies involved in the acquisitions. The idea to start the company hit the younger Mr. Brereton when he was brokering stocks and bonds for Kidder-Peabody Inc., a New York investment bank. He saw that these "mezzanine level companies"-those with revenues between $3 million and $20 million, and profits between $1 million and $4 million-would be turned away by his firm and other investment banks because the value of the deal wasn't high enough to justify the overhead of the big firms. This left a niche for business brokers like Brereton and Co. to step in. Bill Brereton provided the loan to start the enterprise through his other businesses, principally Silicon Valley Printing and Eagle Business Products Inc., both of San Jose. He declined to discuss the amount of the investment. Brereton and Co. opened shop in excess office space at Silicon Valley Printing. After completing its first deal, the company moved to downtown San Jose. In the ensuing deals, including a fourth that is nearing completion, Brandt Brereton worked up detailed documentation of the selling businesses, and used his contacts from his days with the investment bank to find possible buyers. Business brokers typically do not have hands-on business experience or securities experience, and tend to represent small, retail-oriented companies, according to Mr. Brereton. The company employs the securities experience of Mr. Brereton and the business background of the elder Mr. Brereton when conducting its deals. A targeted buyer is provided with a blind summary of the company to prevent the buyer from "low-balling" the selling company, Brandt Brereton said. By the time the buyer commits to an on-site demonstration of the selling company's product, more detailed documentation is provided. Using a intermediary like Brereton and Co. provides selling companies with multiple bidders, which ultimately increases selling prices. And there's no shortage of selling companies. Unlike an initial public offering, business owners are able to divest 100 percent of their business ownership and receive the majority of the money at the close of the acquisition. Public offerings are subject to federal regulations barring owners from selling proceeds of an IPO for a specified period of time. "They get cashed out and get to see their baby grow up," Brandt Brereton said.