Business broker commission rates aren't one number. They run from 8–12% on a $1M Main Street deal to 1.5–3% on a $100M transaction, and the structure changes completely across that range. Understanding where your deal falls and how the fee structures work is the first step to evaluating any advisor proposal correctly.
The benchmark table below is consistent with sell-side transaction cost patterns reported in IBBA Market Pulse quarterly surveys and BizBuySell Insight Reports for 2024–2026, and it's consistent with what our ProCloser network of advisory firms charges in practice. For the full cost picture, the M&A advisor and broker fees benchmark covers each fee model in depth. For a quick sense of what your business is worth before running the fee math, the ProCloser business valuation calculator gives you an indicative range based on your earnings and industry.
Commission Rates by Deal Size
The table covers seven deal-size tiers from sub-$500K Main Street transactions to investment bank territory. The commission rates shown are indicative ranges drawn from IBBA survey data, BizBuySell Quarterly Insight Reports, and ProCloser network benchmarks. They're starting points for modeling your own cost, not a quote.
| Deal Size (Enterprise Value) | Advisor Type | Commission / Success Fee | Typical Minimum Fee | Fee Structure | Retainer? |
|---|---|---|---|---|---|
| Under $500K | Business broker | 10–15% | $20K–$35K | Straight commission | Rarely |
| $500K–$2M | Business broker | 8–12% | $30K–$60K | Straight commission | Sometimes ($2K–$10K) |
| $2M–$5M | Business broker / boutique LMM | 7–10% | $75K–$150K | Flat % or Lehman | Sometimes |
| $5M–$10M | M&A advisor | 5–8% | $150K–$300K | Lehman / modified | Typically ($2K–$10K/mo) |
| $10M–$25M | M&A advisor / LMM bank | 4–7% | $250K–$500K | Double Lehman / modified | Yes ($5K–$20K/mo, credited) |
| $25M–$75M | Mid-market bank | 3–5% | $400K–$750K | Modified Lehman + retainer | Yes (credited) |
| $75M+ | Investment bank | 1.5–3% | $750K+ | Custom / negotiated | Yes (credited) |
Ranges reflect indicative benchmarks consistent with IBBA Market Pulse quarterly surveys, BizBuySell Quarterly Insight Reports, and ProCloser network advisory data for 2024–2026. Actual fees vary by firm, industry, deal complexity, and negotiation. For live transaction benchmarks by deal size and sector, see the ProCloser valuation benchmarks index.
How Broker Commission Is Structured
The percentage in the table is one variable. How that percentage is applied, what base it's calculated on, and what sits underneath it (retainer, minimum fee, tail period) are equally important when you're comparing two proposals.
Straight Commission (Main Street, Under $5M)
The straight commission is the simplest and most common model for Main Street business brokers. There's no upfront payment. The broker earns a percentage of the sale price when the deal closes and receives nothing if it doesn't. For sellers, this alignment is the appeal: the broker gets paid only when you do.
The minimum fee matters more than sellers typically expect. A 10% commission on a $280K sale is $28,000. If the broker's minimum is $35,000, the minimum governs. At $500K and above, the percentage usually controls. The minimum exists because the broker's time cost on a $200K deal isn't dramatically different from their time on a $1M deal, and the lower sale price can't sustain the same percentage-driven economics.
At the $2M–$5M tier, some brokers start introducing Lehman-style structures or negotiated flat rates below 8%, especially in competitive markets where they know a seller is comparing multiple proposals. Brokers working this tier who also run light retainer arrangements ($2K–$5K/month, credited at close) are signaling they run a more managed process than a listing-only shop.
Lehman Formula (LMM Advisors, $5M–$25M)
The Lehman formula is a declining-percentage structure where the advisor earns a higher rate on the first dollars of transaction value and a lower rate on each subsequent tier. The classic version: 5% on the first $1M, 4% on the second million, 3% on the third, 2% on the fourth, 1% on everything above $4M. On a $10M deal, that produces a fee of $250,000, a blended rate of 2.5%.
Because those dollar bands were set when deals were smaller, most advisors now use a scaled-up variant. The most common is the Double Lehman (10/8/6/4/2%), which produces $480,000 on the same $10M deal, a blended rate of 4.8%. Modified versions stretch the tiers across larger bands: 5% on the first $5M, 4% on the next $5M, 3% on everything above $10M. When you're reviewing a proposal from a lower-middle-market advisory firm, confirm exactly which variant they use and run the math at your expected deal size, because the blended rate can vary by a full percentage point or more depending on which version is in the engagement letter.
At this tier, retainers are standard. A $7,500/month retainer over a 10-month engagement is $75,000. If that's credited against a $450,000 success fee, your out-of-pocket at close is $375,000. If it's not credited, your total cost is $525,000. Always get the credit terms in writing before signing.
Investment Bank Fee Structures ($25M+)
At deal sizes above $25M, the fee structure becomes more individually negotiated. The percentage declines steeply because the absolute dollar fee on a $50M deal at 4% is $2M, which most sellers would consider fair; at 8% it's $4M, which they wouldn't. Investment banks working above $75M routinely have minimum fees in the $750K–$1M range and negotiate the structure based on expected deal complexity, whether there's a competitive auction or a negotiated sale, and their read of how much work the engagement will require.
At this tier, sellers almost always have enough leverage to negotiate the fee structure meaningfully. The monthly retainer, its credit terms, the percentage breakpoints, and the minimum floor are all discussion items. Sellers at $50M+ enterprise value who engage two or three advisory firms through a competitive pitch before selecting one routinely achieve materially better fee terms than sellers who engage the first firm they meet with.
Minimum Fees: The Floor That Matters on Smaller Deals
Minimum fees exist because a broker or advisor's time cost doesn't scale proportionally with deal size. Preparing a business for sale, running a buyer process, and managing diligence to close takes roughly the same effort whether the business sells for $800K or $2M. The minimum fee is how advisors ensure the engagement is economically viable for them to take seriously.
For sellers in the $500K–$2M range, the minimum fee is often the number that actually controls the cost, not the stated percentage. A 10% commission with a $50,000 minimum on a $350,000 business means you're paying $50,000, effectively 14.3% of the sale price. The math matters. Always model the fee at your expected sale price and compare it to the minimum to know which one governs.
A higher minimum fee isn't always a red flag. Advisors who set higher minimums often run more comprehensive processes: active buyer outreach rather than passive marketplace listings, professional offering memoranda, and structured diligence management. The fee is only high or low relative to what it produces. A broker charging 8% on a $1.5M business with a $75K minimum who runs a managed buyer process may net you more than a broker at 10% who lists the business on BizBuySell and waits for inbound inquiries.
What's Actually Negotiable
The headline rate is less negotiable than sellers expect at smaller deal sizes, and more negotiable than advisors let on at larger ones. Here's where the real negotiation room sits.
- Retainer credit terms. This is the highest-value negotiation point in the $5M–$25M range. A retainer credited 100% against the success fee is very different from one that isn't. On a 12-month engagement with a $10K/month retainer, that's $120,000 difference in your out-of-pocket cost.
- Minimum fee floor. On deals in the $2M–$5M range, the minimum is sometimes negotiable, particularly if your business is well-prepared and the advisor expects a clean, faster process. A seller who comes in with three years of reviewed financials, normalized earnings documented, and a clear buyer thesis has more negotiating leverage than one who needs six months of preparation work.
- Fee cap or collar on the upside. On deals above $15M, some sellers negotiate a cap on the total dollar fee regardless of the percentage structure, or a reduced rate on value above a certain threshold. Not all advisors accept this, but it's a legitimate ask on larger transactions.
- Earnout and deferred consideration treatment. The engagement letter should specify exactly how the success fee applies to non-cash consideration: seller notes, earnouts, contingent payments. Advisors typically apply the full percentage to the headline enterprise value, including deferred amounts. Some sellers negotiate for the success fee on deferred amounts to be paid only when those amounts are actually received.
- Tail period length. Most agreements include a tail provision: if a buyer introduced by the advisor closes after the engagement ends, the advisor still earns their fee. Twelve months is common; 24 months is aggressive. The tail length and which buyers it applies to are both negotiable.
How to Compare Two Fee Proposals
Two proposals with the same headline percentage can produce very different actual costs. Build a simple cost model before you sign anything.
- Total fee in dollars at expected sale price. Run both proposals through your expected enterprise value. Include retainer payments not credited at close. This is the number that matters, not the percentage.
- Retainer credited or not? Get this in writing. A retainer that's credited 100% against the success fee reduces your true cost; one that isn't credited is an additional cost on top of the success fee.
- How does the fee apply to deferred consideration? If there's an earnout in your deal, confirm whether the success fee is paid on the full headline value or only on amounts received at close. The answer changes your immediate out-of-pocket cost at closing significantly.
- What does the process actually look like? A lower fee with passive marketplace listing and inbound inquiry management produces a different outcome than a higher fee with targeted outreach to 50–150 qualified buyers, a structured data room, and a managed competitive process. Ask for specifics on buyer outreach strategy, how many LOIs they typically generate, and their track record of closing in your deal size and industry.
- Track record in your sector and deal size. A firm that's done 20 closings in your industry at your deal size understands your buyer universe and knows how to position your business. That knowledge has dollar value that a lower commission rate from a generalist firm won't fully offset.
For EBITDA multiples and what businesses in your industry are actually selling for before you run the fee math, the EBITDA multiples by industry report shows 2026 transaction ranges across 25+ sectors. And for live deal patterns by size and sector, the ProCloser valuation benchmarks index tracks lower-middle-market transaction data.
Frequently Asked Questions
What percentage do business brokers charge?
Business brokers typically charge 8–12% of the sale price on deals under $2M in enterprise value, with a minimum fee in the $25,000–$60,000 range. The rate drops to 7–10% in the $2M–$5M tier. Above $5M, sellers engage M&A advisors who use a declining Lehman or modified Lehman formula rather than a flat commission rate. The percentage declines as deal size grows because a flat rate would produce a disproportionately large dollar fee on higher transaction values. Most business brokers charge no upfront retainer; M&A advisors above $5M typically do, and it's usually credited against the success fee at closing.
What is the Lehman formula for M&A advisor fees?
The Lehman formula is a long-standing industry convention for structuring a declining success fee. The classic version: 5% on the first $1M of transaction value, 4% on the second million, 3% on the third, 2% on the fourth, and 1% on everything above $4M. On a $10M deal, that produces a fee of $250,000, a blended rate of 2.5%. Because deal values have risen substantially since the formula was created, most advisors now use a Double Lehman (10/8/6/4/2%), which produces $480,000 on the same $10M deal. The structure is the same in both cases: the fee percentage steps down as the deal grows, which means the advisor always earns more absolute dollars from a higher sale price even as the marginal rate declines.
How much does a business broker charge to sell a $1M business?
For a business selling at $1M, a broker typically charges 10–12%, which is $100,000–$120,000. If the broker sets a minimum fee of $50,000–$75,000, the minimum is unlikely to govern at this deal size since 10% on $1M ($100,000) already exceeds most minimums. The fee is paid at closing only. Most brokers at this deal size work on a pure commission basis without an upfront retainer, though some charge a small listing or onboarding fee of $2,000–$5,000.
Do business brokers charge upfront fees?
Most business brokers handling Main Street deals (under $2M–$5M) work on a pure success commission with no upfront retainer. M&A advisors handling larger transactions ($5M+) typically charge a monthly retainer of $2,000–$25,000 alongside a success fee. Always ask whether the retainer is credited 100% against the success fee at close. A credited retainer changes the true total cost significantly compared to one that's non-refundable and not credited. Retainers that are non-refundable and non-credited above $30,000–$50,000 are generally considered a red flag in the M&A advisory market.
What is a success fee in a business sale?
A success fee is the commission paid to the broker or M&A advisor when the business sale closes. It's calculated as a percentage of the total enterprise value agreed in the purchase agreement, not just the cash received at closing. This matters for deals with earnouts, seller notes, or contingent payments: the success fee typically applies to the full agreed enterprise value, including deferred amounts, even if those amounts haven't been paid yet. Confirm how the success fee applies to deferred consideration in your engagement letter, and whether the advisor is paid on those amounts at close or when you actually receive them.
Are broker commission rates negotiable?
Yes, though the room varies significantly by deal size. On Main Street transactions (under $2M), brokers have limited flexibility because the dollar fee is already modest relative to their time cost. In the $5M–$25M M&A advisor range, retainer credit terms, minimum fee floor, and the specific Lehman variant used are all legitimate discussion points. The three most consistently negotiable items are: the retainer amount, whether it's credited at close, and the success fee percentage on deal value above a negotiated breakpoint. Sellers who run a competitive process among two or three advisory firms before selecting one tend to achieve better terms than those who engage the first firm they meet with.
What is the double Lehman formula?
The Double Lehman doubles each tier of the classic Lehman formula: 10% on the first $1M, 8% on the second million, 6% on the third, 4% on the fourth, 2% on everything above $4M. On a $10M deal it produces a fee of $480,000 (blended rate 4.8%), versus $250,000 (2.5%) under the classic. M&A advisors use the Double Lehman because the original formula's dollar bands were set decades ago and no longer reflect the actual fee economics needed to fund a comprehensive sell-side process at modern deal sizes.
How do I compare two broker fee proposals?
Run both proposals through your expected enterprise value and calculate the total fee in dollars, including any retainer not credited at close. Confirm the minimum fee and which number it governs at your deal size. Ask how the success fee applies to earnouts and deferred consideration. Confirm the tail period length and which buyers it covers. Then look at process scope: how many buyers does each firm actively contact, what's their track record in your industry, and how do they handle diligence management? A lower percentage from a firm running a passive process usually produces a worse net outcome than a higher percentage from a firm that generates real competitive tension among multiple qualified buyers.