M&A advisory fee calculator
Enter your expected deal size to see what you'd owe an advisor under three common fee structures: the classic Lehman formula, Double Lehman, and modern market percentages. Plus typical retainer ranges by deal tier.
Your deal details
Estimates are indicative. Real fees vary by firm, deal complexity, and negotiation.
Enter a deal size above and click Calculate to see your fee estimate.
How the three fee models work
Classic Lehman formula
Developed by Lehman Brothers for investment banking mandates, the classic Lehman formula applies a tiered percentage to each million of deal value:
- 5% on the first $1M
- 4% on the second $1M
- 3% on the third $1M
- 2% on the fourth $1M
- 1% on everything above $4M
A $10M deal under the classic formula yields a success fee of ($50,000 + $40,000 + $30,000 + $20,000 + $60,000) = $200,000. At $50M it produces $540,000, or about 1.1% of deal value. The Lehman formula was designed for large transactions and often produces fees too low to justify the work on smaller deals, which is why advisors working below $10M typically use the Double Lehman.
Double Lehman (Modern Lehman)
The Double Lehman doubles each tier: 10% on the first million, 8% on the second, 6% on the third, 4% on the fourth, and 2% above $4M. Business brokers and lower middle market M&A advisors commonly use this structure for deals under $15M. A $5M deal under Double Lehman yields ($100,000 + $80,000 + $60,000 + $40,000 + $20,000) = $300,000, or 6% of deal value. This is more realistic compensation for the time and resources an advisor invests in a deal of that size.
Modern market percentage
Many advisors today simply charge a flat percentage of deal value, with the percentage declining as deal size increases. This approach is easier to model and negotiate than the tiered formulas. Typical market ranges:
| Deal size | Market name | Typical success fee | Monthly retainer |
|---|---|---|---|
| Under $5M | Business Broker | 8% – 12% | $2K – $8K/mo |
| $5M – $25M | Lower Middle Market | 4% – 7% | $8K – $20K/mo |
| $25M – $100M | Middle Market | 2% – 4% | $20K – $60K/mo |
| $100M+ | Upper Middle Market | 0.75% – 2% | $50K – $150K/mo |
These are market-wide ranges. Strong advisors with deep sector relationships sometimes command the top of the range; newer firms competing on price may offer the bottom. See our full guide to M&A advisory fees for detailed breakdowns by firm type and deal structure.
What affects where your fee lands within the range
The factors that shift your fee within a tier are mostly about how much risk and work the engagement carries for the advisor:
- Clean, documented financials. Reviewed or audited books with clearly documented add-backs reduce due diligence risk and can justify a lower success fee percentage.
- Narrow industry specialization. Advisors who have closed deals specifically in your sector (say, SaaS or HVAC services) typically charge a premium over generalists because their buyer networks drive better outcomes. See EBITDA multiples by industry for sector-specific context.
- Competitive bidding. Getting proposals from at least three advisory firms is the most reliable way to compress fees. Competing proposals create real negotiating leverage on both the retainer and the success fee percentage.
- Retainer-to-success-fee credit. Always confirm whether retainer payments reduce your final success fee at close. Most middle market engagements credit 100%; some credit only 50%. This is a negotiating point, not a fixed rule.
- Minimum fee provisions. Most engagements include a minimum success fee (often $200,000 to $1.5M depending on tier). If the percentage calculation would produce less than the minimum, you pay the minimum. Check this number explicitly before signing.
What you're actually paying for
M&A advisory fees cover a substantial body of work that runs 9 to 18 months on a typical lower middle market deal. That includes building the buyer list (50 to 250 targeted acquirers), writing the Confidential Information Memorandum (CIM), running the outreach and qualification process, managing multiple letter of intent negotiations, coordinating due diligence, and negotiating the final purchase agreement alongside your attorney. The best advisors also know which buyers are actively acquiring in your sector right now, which can shorten the timeline and increase competitive pressure on price.
Understanding what the fee covers helps you evaluate whether a proposal is reasonable or overpriced. An advisor charging 5% on a $20M deal should be doing significantly more than just a quick CIM and a handful of buyer calls.
Frequently asked questions
How much does an M&A advisor charge?
M&A advisors typically charge a monthly retainer plus a success fee at closing. Retainers range from roughly $5,000/month for sub-$5M deals to $75,000+/month for large transactions. Success fees fall between 1.5% and 12% depending on deal size. Most retainers are credited against the success fee at close, so your net out-of-pocket is just the success fee if the deal closes on time.
What is the Lehman formula for M&A fees?
The classic Lehman scale calculates success fees as 5% of the first $1M of deal value, 4% of the second million, 3% of the third, 2% of the fourth, and 1% of everything above $4M. Developed by Lehman Brothers, it remains a common benchmark but tends to underprice work on smaller deals, which is why the Double Lehman (10/8/6/4/2%) is more commonly used today for transactions under $15M.
What is the Double Lehman formula?
The Double Lehman doubles the classic tiers: 10% on the first million, 8% on the second, 6% on the third, 4% on the fourth, 2% on everything above $4M. Business brokers and lower middle market advisors use it most often for deals under $15M. At $5M, the Double Lehman produces a success fee of $300,000 (6%), versus $150,000 (3%) under the classic formula.
Are M&A retainer fees credited against the success fee?
Usually yes. Most engagement letters credit some or all of the retainer paid during the process against the success fee at closing. Some agreements credit 100%, others credit 50%. This is a negotiating point, not a default. Always confirm it in writing before signing. If a firm insists the retainer is non-creditable, that should be factored into your total cost comparison.
Can I negotiate M&A advisory fees?
Yes. The success fee percentage, retainer amount, minimum fee, retainer credit percentage, and even the tail provision are all negotiable. Your best leverage is competing proposals. Getting three advisory firms to propose simultaneously is the standard approach. Sellers with recurring revenue, clean financials, and a clear buyer pool have more negotiating room because they represent lower execution risk for the advisor. Getting matched with multiple vetted firms at once is the fastest way to build that leverage.
What is a minimum success fee in M&A?
A minimum fee is the floor the advisor charges regardless of whether the percentage calculation produces a lower number. For lower middle market deals ($5M–$25M), minimums typically range from $200,000 to $750,000. For middle market transactions above $25M, minimums commonly start at $750,000 to $1.5M. If your deal closes at the low end of your range, the minimum may be what you actually pay rather than the percentage figure. Always calculate both and understand which applies.
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