What it costs to sell a business: broker & M&A advisor fees
Brokers and advisors get paid in a handful of recognizable ways. Once you know the models, comparing two proposals stops being a guessing game. Here's the plain-English breakdown, with indicative ranges and the math behind the success fee.
Almost every seller asks the same question early: what will this cost me? It's a fair thing to want pinned down before you sign anything. The catch is that "broker fees" and "advisor fees" aren't one number. They're a small set of pricing models, and which one applies depends mostly on the size of your business and who you hire to sell it.
This is a reference, not a quote. We'll walk through the four fee models you'll actually run into, what each one buys you, and how to read two proposals side by side without getting fooled by a low headline percentage. The ranges below are indicative and typical. They vary by firm, industry, and deal, and no one can price your sale from a web page.
The four fee models, side by side
Here's the lay of the land before we get into each one. The percentages are indicative starting points for orientation, not offers.
| Fee model | Typical cost (indicative) | Best fit |
|---|---|---|
| Business broker, straight commission | ~8–12% of sale price (small); lower as deals grow | Main Street / small businesses |
| M&A advisor, retainer + success fee | Retainer in the tens of thousands + declining success fee | Lower-middle-market |
| Success-fee-only (no retainer) | Success fee only, paid at closing | Sellers who want aligned incentives |
| Hourly / project (less common) | Hourly or fixed for a defined scope | Specific tasks, e.g. a valuation |
Indicative figures for general orientation, not a valuation or a quote. Actual fees vary by firm, sector, deal size, and complexity. See the methodology note at the end.
1. The business broker straight commission
This is the model most people picture. A business broker lists your company, finds a buyer, and takes a percentage of the final sale price as commission, paid only when the deal closes. For smaller, owner-operated "Main Street" businesses, that commission is indicatively in the 8–12% range. Many brokers also set a minimum fee, often in the low five figures, so a very small sale still covers their time.
The percentage usually shrinks as the price climbs. A broker isn't going to charge 10% on a $6M business, because the dollar fee would be enormous relative to the work. That's exactly why larger deals tend to move from a flat broker percentage to the sliding scales we cover next.
2. The M&A advisor retainer plus success fee
Step up in size and you're usually talking to an M&A advisor rather than a broker. Their pricing has two parts. First, an upfront retainer, commonly in the tens of thousands of dollars, to cover the real work of preparing your business for market: building the financial model, writing the offering materials, and assembling a buyer list. Some firms credit the retainer against the final bill; some don't. Ask.
Second, a success fee at closing. This is almost always a declining percentage of the deal value, which brings us to the formula every advisor knows by name.
The Lehman formula, explained
The Lehman formula is a real, long-standing industry convention for structuring a success fee so the percentage steps down as the deal gets bigger. The classic version:
- 5% on the first $1 million of transaction value
- 4% on the second million
- 3% on the third million
- 2% on the fourth million
- 1% on everything above $4 million
So on a $5M deal, the fee isn't 5% of $5M. It's 5% + 4% + 3% + 2% + 1% across the tiers, which works out to $150,000, a blended rate of 3%. Because those dollar figures were set decades ago and values have risen since, many advisors now use a scaled-up version. The common Double Lehman doubles each tier (10/8/6/4/2%), and other variants stretch the tiers across larger dollar bands. The structure is what matters: the more your business sells for, the lower the marginal fee on the top dollars.
3. Success-fee-only, with no retainer
Some firms skip the retainer entirely and work on a success-fee-only basis. You pay nothing upfront; the firm is paid only if and when your business sells. The appeal is obvious. You're not writing a check for work that might not lead to a closing, and the advisor's payday depends entirely on getting you across the line.
That alignment is the whole point. A success-fee-only advisor has every reason to push for the highest price and an actual close, because that's the only way they earn. This is the model ProCloser is built around: we match sellers with vetted advisory firms, including no-retainer options, so you can find aligned representation without the upfront risk. It's free to the seller and confidential.
4. Hourly or fixed-project fees
Less common for a full sale, but worth knowing. Some advisors will do a defined piece of work, like a formal valuation, a readiness assessment, or a single piece of diligence prep, on an hourly or fixed-fee basis. It's a fit when you need a specific deliverable rather than someone to run the whole transaction.
What each fee actually buys
A fee is only high or low relative to what you get for it. Before you compare percentages, get clear on the scope. Good representation generally covers:
- Valuation and positioning: a defensible number and a story that holds up in front of buyers.
- Marketing materials: the offering memorandum and financial summary that buyers actually read.
- Buyer access: a network of qualified, motivated buyers, not just a public listing.
- A competitive process: running more than one buyer at a time is what protects your price.
- Negotiation and deal structure: terms, earnouts, and financing that decide what you actually net.
- Diligence management: keeping the deal alive through the part where most fall apart.
If you want the full picture of how this process runs end to end, read our guide to selling your business. And if you're still deciding which kind of professional you need, business broker vs. M&A advisor lays out the difference.
How to compare two offers
Lay the proposals next to each other and check the same things on both:
- Total likely cost, not the headline rate. A low success-fee percentage with a large non-credited retainer can cost more than a higher percentage with no retainer. Model your expected sale price through each structure.
- Is the retainer credited? A retainer that's deducted from the success fee is very different from one that isn't.
- Where does the scale break? On a Lehman-style fee, the tier breakpoints decide your blended rate. Run the math on your deal size.
- What's the engagement length and the tail? Many agreements include a "tail" period during which the advisor is still owed a fee if a buyer they introduced closes after the contract ends. Reasonable; just know it's there.
- What's the scope and track record? Cheaper fees often mean a thinner process and fewer buyers at the table.
Why the cheapest fee is rarely the best deal
It's tempting to pick the lowest percentage and move on. Don't. The fee is a small fraction of the outcome that actually matters: your final sale price and the terms attached to it. An advisor who charges a point or two more but runs a genuine competitive process, with multiple buyers, real tension, and sharp negotiation, routinely nets sellers far more than the difference in fee. A bigger slice of a small pie loses to a smaller slice of a much bigger one, every time. Judge representation on what it leaves in your pocket after closing, not on the rate card.
A note on getting your number first
Before you weigh any fee, it helps to know roughly what your business is worth, because the dollar value drives the fee math. Start with our free business valuation calculator for an indicative range, then use that figure to model what each fee structure would actually cost you.
Methodology & a word on these numbers
Every figure on this page is indicative and typical, gathered from common practice in business brokerage and lower-middle-market M&A. They are meant for orientation only and are not a quote, valuation, or financial advice. Actual fees vary widely by firm, industry, deal size, complexity, and negotiation. The Lehman formula is described as a factual, well-known industry convention. Always confirm the exact structure in writing with any firm you engage, and read the agreement before you sign.
Common questions about broker & advisor fees
How much do business brokers charge?
Most business brokers work on a straight success commission paid only when the business sells. For small, Main Street deals it's indicatively around 8–12% of the sale price, often with a minimum fee in the low five figures so very small deals still cover the broker's time. The percentage typically falls as deal size rises, and larger lower-middle-market transactions usually move to an M&A advisor on a sliding scale instead. Treat these as indicative ranges that vary by firm, industry, and deal.
What is a typical M&A advisor success fee?
It's usually a percentage of total transaction value, paid at closing, and it almost always declines as the deal gets larger. On lower-middle-market deals the blended success fee commonly lands in the low-to-mid single digits as a percentage of enterprise value, with smaller deals at the higher end. Many advisors also charge an upfront retainer, often in the tens of thousands, that may or may not be credited against the success fee. Exact figures vary by firm and deal.
What is the Lehman formula?
It's a long-standing industry convention for setting a declining success fee. The classic version pays 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. Because dollar values have risen since it was created, many advisors now use a "Double Lehman" (10/8/6/4/2%) or other scaled-up variants. The principle is the same: the fee percentage steps down as the deal grows.
Are there no-retainer M&A advisors?
Yes. Some firms work on a success-fee-only basis with no upfront retainer, so they're paid only if and when your business sells. That aligns their incentives with yours and removes the risk of paying for work that may not close. Get matched with a vetted firm, including no-retainer options, free to sellers and confidential.
Do I pay anything if my business doesn't sell?
With a pure success-fee model, no. The fee is contingent on a closing. With a retainer-plus-success-fee model, the retainer is generally non-refundable whether or not the deal closes, which is one reason to ask upfront whether the retainer is credited against the final fee.
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