The cost of hiring an M&A advisor depends on deal size, fee structure, and complexity. Smaller transactions face higher percentage fees, while larger deals carry lower percentages but higher total fees. This complete guide explains retainers, success fees, Lehman formulas, and typical m&a advisor fees by deal size with practical examples.
Why Understanding M&A Advisor Fees Matters
If you’re planning to sell your company, merge, or acquire, one of the first questions is: “how much does an m&a advisor charge?”
Your advisor will play a critical role in maximizing valuation and structuring your deal. But before signing an engagement letter, it’s important to understand m&a advisory fee structure, what’s included, and how costs vary by transaction size.
👉 If you haven’t yet estimated your company’s worth, try our free Company Valuation Calculator before diving deeper into fees.
What Does an M&A Advisor Charge? (The Fee Components)
The m&a advisor fee usually includes several layers:
1. Retainers (Work Fees)
Paid upfront or monthly.
Typical range: $50k–$100k total, or $5k–$20k per month.
Often credited against the success fee.
Covers prep work: financials, pitch materials, buyer lists, outreach.
💡 Related: Learn more about how much a business valuation costs.
2. Success Fees
Paid at closing.
Usually a percentage of enterprise value or equity value.
Percentages decline as deal size increases.
3. Minimum Fees
Advisors often set a floor (e.g., $250k).
Ensures fair compensation if the deal closes at a lower price.
4. Out-of-Pocket Expenses
Travel, data rooms, third-party reports.
Usually reimbursed by the client.
Lehman and Double Lehman Formulas Explained
Two frameworks dominate the m&a advisory fee agreement world:
Lehman Formula
5% of first $1M.
4% of second $1M.
3% of third $1M.
2% of fourth $1M.
1% of amounts above $4M.
Double Lehman Formula
10%, 8%, 6%, 4%, 2% at the same tiers.
Common in m&a advisory fee structure small business deals.
Both methods incentivize advisors while aligning fees with deal size.
👉 To understand how different deal types impact structure, see our guide on the Difference Between Merger and Acquisition.
M&A Fees by Deal Size
Here’s how m&a advisory fees typically look across the market:
| Deal Size (Enterprise Value) | Success Fee Range | Notes |
|---|---|---|
| Under $5M | 8%–12% | Double Lehman common; strong minimums. |
| $5M–$20M | 4%–7% | Retainers and $250k+ minimums apply. |
| $20M–$50M | 2%–4% | More competition; hybrid fee structures. |
| $50M–$150M | 1.5%–3% | Larger deals; customized negotiations. |
| $150M+ | 1%–2% | Big transactions; often bulge-bracket banks. |
👉 Want to understand valuation drivers? Explore our blog on How to Price a Business for Sale.
Worked Examples: How Fees Apply
Example A – $12M sale using Double Lehman:
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10% of $1M = $100k
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8% of $1M = $80k
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6% of $1M = $60k
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4% of $1M = $40k
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2% of $8M = $160k
Total = $440k (~3.7% blended)
Example B – $50M sale at 2.5% flat fee:
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Success Fee = $1.25M
Example C – $200M sale at 1.5%:
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Success Fee = $3M
These show how m&a advisory fee percentage declines, but absolute fees grow.
Buy-Side vs Sell-Side M&A Advisory Fees
Sell-Side Fees
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Success-based.
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Advisors create buyer competition.
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Percentages higher (4%–12% depending on size).
Buy-Side Fees
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Retainer-heavy, less percentage-based.
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Monthly retainers: $5k–$50k.
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Closing fee: 1%–2% of deal size.
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Sometimes milestone fees for LOIs.
👉 Considering buying a company? Learn the basics of 409a valuation for private companies and how to value a startup business.
M&A Legal Fees by Deal Size
Beyond advisory fees, budget for m&a legal fees by deal size:
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Under $10M deals: $75k–$150k.
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$10M–$50M deals: $150k–$400k.
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$50M–$150M+ deals: $400k–$1M+.
On average, total transaction costs (legal, accounting, advisory) run 1%–4% of deal value.
👉 Protect your deal with accurate asset pricing—see our article on Intellectual Property Valuation Methods.
Factors That Affect the Cost of an M&A Advisor
When business owners ask about typical m&a fees or wonder how much does an m&a advisor charge, the truth is: there is no single formula. Several factors influence the final fee structure. Understanding these variables helps you budget better and negotiate a fair m&a advisory fee agreement.
1. Deal Size and Complexity
The single biggest factor is deal size. Smaller deals generally face higher m&a advisor fee percentages because the workload is similar regardless of valuation, but the transaction amount is lower. For example, a $5M sale may carry 8%–12% success fees, while a $100M transaction could drop to 1.5%–3%. Complex businesses with multiple subsidiaries, international operations, or specialized compliance also increase fees.
👉 Learn how to establish the right sale price in our guide: How to Price a Business for Sale.
2. Industry Specialization
Advisors with expertise in industries like healthcare, fintech, or technology may charge premium m&a advisor fees. Their sector knowledge, buyer networks, and ability to handle industry-specific diligence add value. If your business is in an intangible-heavy sector, you’ll benefit from specialized guidance.
👉 Read more in our article: How to Value Intangible Assets.
3. Company Readiness
If your financial records are clean and you’ve already completed a certified business valuation, your advisor’s workload decreases. Businesses with messy accounting or missing records require more prep work, which may raise costs.
4. Buyer Universe
If your company has many strategic buyers interested, advisors view it as lower risk, which can help you negotiate lower m&a advisory fee percentages. Conversely, niche businesses with a very limited pool of potential buyers may face higher fees because of the extra outreach and marketing effort required.
5. Timeline and Urgency
Owners looking to exit quickly should expect higher m&a advisor fees. Rushed timelines often require accelerated buyer outreach, extended advisor hours, and parallel diligence processes. Planning ahead gives you more leverage in negotiations and can save significant costs.
6. Geography and Cross-Border Deals
Cross-border transactions carry additional legal, tax, and regulatory complexity. Advisors involved in these deals often add premiums to their m&a advisory fee structure, reflecting the added expertise and workload.
👉 If you’re working across borders or dealing with IP assets, see our post on Intellectual Property Valuation Methods.
7. Risk Structures (Earnouts & Seller Financing)
Deals that involve earnouts, escrow accounts, or seller financing require more complex structuring. Advisors will often increase their fee to reflect the additional negotiations and diligence required.
8. Advisor Brand and Reputation
Top-tier advisory firms or bulge-bracket investment banks typically charge more. However, their brand reputation and buyer connections may deliver a higher sale price that offsets the increased cost of an m&a advisor. Smaller boutique advisors may offer more flexible terms, especially for m&a advisory fee structure small business deals.
What’s in an M&A Advisory Fee Agreement?
Before committing to an advisor, you’ll sign an m&a advisory fee agreement. This document outlines the expectations, fees, and responsibilities of both parties. Here’s what to look for:
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Scope of Work – Defines whether the advisor will prepare marketing materials, identify buyers, negotiate terms, and assist in due diligence.
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Definition of Transaction Value – Clarifies whether fees are based on enterprise value or equity value, and whether debt, earnouts, or rollover equity are included.
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Retainer Structure – Sets the upfront or monthly fee schedule and explains whether it will be credited against the success fee.
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Success Fee Formula – Outlines whether the Lehman, Double Lehman, or a flat percentage applies.
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Minimum Fees – States the minimum success fee (often $250k or more).
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Tail Provisions – Ensures the advisor is compensated if a buyer they introduced closes the deal after the contract ends.
👉 If you’re in an industry with intangible-heavy businesses, understanding how assets are valued is critical. Read: How to Value Intangible Assets.
M&A Broker Fees vs Advisor Fees
Many owners confuse m&a broker fees with m&a advisor fees, but they are quite different.
M&A Broker Fees
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Common for very small deals (sub-$2M).
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Charge flat commissions (8%–12%).
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Offer less comprehensive support.
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Focus on connecting buyers and sellers rather than running a structured process.
M&A Advisor Fees
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Typically used for $5M+ deals.
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Include retainers plus tiered success fees.
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Offer full service: valuation, buyer outreach, negotiations, diligence management.
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Better suited for maximizing enterprise value in complex transactions.
👉 Thinking about selling larger assets like equipment? Explore our detailed guide on Equipment Valuation Services.
Reducing the Cost of an M&A Advisor
Although the cost of an m&a advisor is significant, there are strategies to manage it:
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Run a Competitive Advisor Selection – Interview multiple advisors, compare m&a advisory fee structures, and request written proposals.
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Negotiate Minimum Fees – Push for lower minimums if you’re uncertain about final valuation.
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Ensure Retainer Credits – Make sure retainers are credited against success fees to avoid paying double.
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Clarify Enterprise vs Equity Basis – Define transaction value clearly in the m&a advisory fee agreement to prevent surprises.
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Prepare Financials Early – A professional valuation, such as a Certified Valuation Analyst, will streamline negotiations and reduce advisor effort.
👉 Planning to sell an asset-heavy business? Read our resource on Equipment Valuation Services.
FAQs
Q1. How much does an M&A advisor charge overall?
Most advisors charge a retainer ($50k–$100k) plus a success fee that decreases as deal size increases.
Q2. What’s a typical m&a advisory fee percentage?
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Small deals: 8%–12%.
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Mid-market: 2%–7%.
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Large deals: 1%–2%.
Q3. What are m&a advisor fees for selling a company?
Sell-side fees are success-driven and higher than buy-side. For smaller deals, expect 8%–12%, stepping down with larger transactions.
Q4. Do buy side m&a advisory fees differ?
Yes. Buy-side clients pay more in retainers and lower closing fees, often 1%–2%.
👉 Curious about acquisition prep? Check How Much Does a Business Valuation Cost?.
Q5. What are typical m&a legal fees by deal size?
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Small: $75k–$150k.
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Mid-market: $150k–$400k.
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Large: $400k+.
Q6. Can I negotiate m&a advisor fees?
Yes. Retainers, minimums, success fee structures, and transaction definitions are all negotiable in the m&a advisory fee agreement.