If you’re looking to sell or buy your small business, a great banker is worth their weight in gold. A good investment banker will help you get your business organized, identify potentially interested parties and drive a process to maximized bidding competition and ultimately get the best price possible. In summary, I always suggest hiring a banker or broker is a wise decision.
But how much will it cost?
Well, M&A fees can take a bigger bite out of a small business sale than owners expect. A 4% fee on a $10 million deal is $400,000. A minimum fee can push that percentage higher. And the advisor may charge for value you never receive in cash at closing.
The rate matters. So do the fee floor, retainer credit, and words used to define the deal value. Here is how to compare proposals before you sign.
How much are M&A fees?
Firmex’s 2024–25 U.S. M&A Fee Guide reports these effective success-fee benchmarks. The study surveyed 212 U.S. advisors in December 2024 and January 2025, mostly serving sellers. These are survey figures, not current quotes or a separate buy-side rate card.
| Deal value | Success fee benchmark | Fee in dollars |
|---|---|---|
| $5 million | 5.7% | $285,000 |
| $10 million | 4.7% | $470,000 |
| $20 million | 4.0% | $800,000 |
| $50 million | 3.2% | $1,600,000 |
| $100 million | 2.4% | $2,400,000 |
| $150 million | 2.1% | $3,150,000 |
Source: Firmex U.S. M&A Fee Guide, page 18. Dollar amounts are DailyDime calculations. They exclude uncredited work fees and other deal costs.
Small deals still need buyer outreach, financial review, and contract work. Spreading that effort over a smaller sale can mean a higher fee percentage. Below $5 million, get quotes from advisors who handle businesses your size. Do not extend this table into a universal rate for business brokers.
What a sell-side advisor charges
A sell-side advisor helps an owner sell a business or a stake in it. The work may include a confidential information memorandum, or CIM, which explains the business to buyers. The advisor may also contact buyers, compare offers, and help manage the sale.
Retainers and work fees
A retainer pays the advisor while the work is underway. It may be a lump sum, a monthly bill, or a payment tied to a milestone.
In the Firmex survey, the most common monthly fee was $5,000 to $10,000. The most common one-time fee was $26,000 to $50,000. Some or all work fees were credited toward the success fee by 63% of firms.
A credit is not a refund. If the sale fails, a nonrefundable retainer stays with the advisor. Ask when monthly billing stops and whether a minimum number of payments applies.
Success fees
A success fee is generally due when the deal closes. Four structures are worth understanding. The figures below are examples, not market quotes.
- Flat percentage: A 4% rate on a $10 million fee base produces a $400,000 fee.
- Double Lehman: Charge 10% on the first $1 million, 8% on the second, 6% on the third, 4% on the fourth, and 2% above $4 million. At $10 million, the fee is $400,000. Each rate applies only to its slice.
- Accelerator: Charge 2.5% up to $20 million, then 10% on value above that point. A $25 million sale produces a $1 million fee: $500,000 on the first portion and $500,000 on the extra $5 million.
- Minimum fee: Charge the greater of the formula or a stated floor. At 4%, a $4 million sale produces $160,000. A $300,000 floor raises the bill to $300,000, or 7.5%.
For an accelerator, confirm whether the higher rate applies only to value above the target. Applying it to the whole deal gives a very different answer.
How buy-side M&A fees differ
A buy-side advisor helps a buyer find and assess companies to acquire. A search across dozens of targets is different from help closing a deal the buyer already found. Price the scope of work first.
There is no single buy-side fee schedule. For one disclosed example, Canada-based Business Succession Group lists monthly buy-side engagements of $5,000 to $25,000 and success fees of 2% to 5%. That is one firm’s published pricing, checked October 9, 2026, not a U.S. market average. Confirm currency and terms in any quote.
Ask whether you pay for the search, each completed acquisition, or both. Confirm the treatment of targets you already know and whether retainers reduce the closing fee.
A percentage fee also creates a tension: the advisor earns more if the buyer pays more. A fixed fee or cap can limit that incentive. A savings bonus needs a clear starting valuation so the target price cannot be inflated to create a reward.
Five terms to settle before you sign
1. Define the value used to calculate the fee
The fee base may be larger than your cash payout. Venable’s engagement-letter guide highlights the importance of the contract’s definition of transaction value and its treatment of earnouts.
Enterprise value measures the operating business. A simplified bridge is equity value plus debt minus cash. But the engagement letter’s fee base can use a different definition. Ask for a written calculation that shows debt, cash, working-capital adjustments, and any other amounts included.
For example, a $10 million enterprise value with $2 million of debt and no cash implies $8 million of equity value before other adjustments. A 4% fee on $10 million is $400,000. On $8 million, it is $320,000. That one definition changes the bill by $80,000.
Also settle these questions:
- Earnout: Can the fee become due only when the extra payment is received?
- Seller note: Is the fee due at closing or as the buyer repays the loan?
- Rollover equity: What fee applies to the ownership you keep in the buyer, and when is it payable?
These choices matter in both a strategic sale and a recapitalization. A headline price does not tell you how much cash lands in your account.
2. Test the minimum fee against a lower sale price
Ask the advisor to show the bill at three prices: your target, a lower outcome, and a higher outcome. Include the minimum fee and any accelerator.
Then divide each bill by the fee base to find the effective rate. A floor that seems harmless in the pitch can become costly if the price falls.
3. Put credits and expense limits in writing
Ask for all retainers to offset the success fee, including any minimum. Do not assume the advisor agrees unless the contract says so.
Suppose you pay $60,000 in retainers and the success fee is $400,000. With a full credit, another $340,000 is due at closing. With no credit, total advisor fees reach $460,000 before expenses.
Set a dollar cap on expenses that do not need your approval. Require written approval above it. Axial’s negotiation guide also recommends reviewing expense caps and limiting reimbursable expenses to third-party costs.
4. Narrow exclusivity and the tail
During an exclusive engagement, you may owe the advisor a fee even if you found the buyer yourself. List existing buyer relationships before signing and negotiate any exclusions or reduced fees.
A tail lets the advisor collect a fee on a covered deal after the engagement ends. Negotiate its length, the covered buyers, and a deadline for the advisor to deliver that buyer list. Ask your lawyer to address termination for cause and overlap with a replacement advisor.
Check whether signing an agreement during the tail triggers a fee even if closing happens later. The date that matters should be clear.
5. Budget for the rest of the deal
The advisor is only one bill. Get separate estimates for legal work, tax advice, accounting review, data-room services, and closing or escrow charges.
A quality of earnings review tests whether reported earnings are reliable and likely to continue. Its scope and price depend on the business and the state of its books. Use a written quote instead of treating a broad online range as your budget.
Also check for fees triggered before closing, including a signed letter of intent or term sheet, or your decision to reject an offer. A deal that falls apart can still leave you with bills.
Before hiring an advisor, ask for one worksheet showing the total fees, payment dates, and cash you would receive under each sale scenario. That is the number to compare across proposals.