What Does It Cost to Sell a Business? Broker Fees, M&A Advisor Fees, and the Alternatives

The cost to sell a business is usually built around a success fee, a percentage of the final sale price that is paid only when the deal closes. For smaller “Main Street” businesses, that success fee is commonly in the range of 8% to 12% of the sale price, sometimes structured as a flat 10%. As deals get larger, the percentage typically drops, and a lower-middle-market M&A advisor may charge a sliding scale plus a monthly retainer or an up-front work fee.

In other words, there is no single sticker price for selling a company. What you pay depends mostly on two things: the size of the deal and the kind of professional you hire, though the amount of work the engagement actually involves matters too. This guide breaks down the three main fee models (business brokers, M&A advisors, and investment banks), explains the Lehman formula, and looks at newer technology-enabled options that are changing the math.

Business broker fees (Main Street deals)

A business broker typically handles smaller, owner-operated businesses: restaurants, local service companies, small manufacturers, e-commerce stores, and similar “Main Street” deals, often valued from tens of thousands of dollars up to a few million. This is the part of the market where the phrase “how much do business brokers charge” comes up most often.

The dominant model is a commission-based success fee paid at closing. Common norms include:

• A percentage of the sale price, frequently in the 8%–12% range, with 10% being a widely quoted figure for smaller businesses.
• A minimum fee: many brokers set a floor (for example, a fixed dollar minimum) so that very small deals still cover the broker's time.
• Little or no up-front cost. Many Main Street brokers work on pure contingency, earning only if and when the business sells, though some charge a modest package or listing fee.

These percentages are general norms, not fixed rules, and they vary by broker, region, industry, and the complexity of the sale. A larger business at the top of the Main Street range may negotiate a lower percentage, while a very small or hard-to-sell business may sit at the higher end or hit the minimum fee.

M&A advisor and boutique investment bank fees (lower-middle-market)

Once a business is large enough to attract private equity, strategic acquirers, or institutional buyers, sellers usually engage an M&A advisor or boutique investment bank rather than a Main Street broker. This is broadly the lower middle market: roughly $5 million to $100 million of revenue, or about $1 million to $15 million of EBITDA. The fee structure changes accordingly.

Retainers and minimum fees

M&A advisors more often charge some combination of up-front and success-based compensation:

• A retainer or work fee: a monthly or one-time payment that funds the preparation work (financial analysis, marketing materials, buyer research). It is often modest relative to the eventual success fee and is sometimes credited against it at closing.
• A success fee: still the largest component, paid at closing and calculated as a percentage of transaction value.
• Often a minimum success fee as well, a floor that ensures the engagement is worthwhile on smaller lower-middle-market deals, regardless of the sliding-scale percentage.

The Lehman formula and the Double Lehman

Success fees in this segment are frequently based on the Lehman formula (also called the Lehman scale), a tiered percentage that steps down as the deal grows. The classic Lehman formula is:

Because the original Lehman percentages, set in the late 1960s and early 1970s, feel low at current deal sizes, many advisors use the Double Lehman (each tier doubled), or a custom variation, sometimes with a flat percentage above a certain deal size. The key idea is the same: the marginal rate declines as the price rises, so the blended (effective) percentage on a larger deal ends up lower than the headline rate charged on the very first dollar of the sale price.

As a rough illustration under the Double Lehman scale, a $5 million sale would carry a blended success fee of roughly 6% of the total, while a much larger deal would blend down toward the low single digits. Actual scales are negotiated deal by deal.

Investment bank fees (upper-market context)

For large, upper-middle-market and enterprise transactions (hundreds of millions to billions of dollars), sellers hire full-service investment banks. Here the success-fee percentage is much smaller, often around 1% to 2% or less, because a small slice of a very large number is still an enormous fee. These engagements also tend to involve larger retainers, expense reimbursement, and sometimes additional fees for financing or fairness opinions. Most private-company owners will never operate at this level, but it explains the pattern: the bigger the deal, the lower the percentage.

What you actually get for the fee

A success fee can look large in isolation, so it helps to see what a good advisor or broker is being paid to do. A well-run sell-side process generally includes:

• Preparation and positioning: normalizing financials (a quality-of-earnings view), building a projection model, and determining a defensible valuation range.
• Marketing materials: a teaser, a confidential information memorandum (CIM), and a non-disclosure agreement (NDA) to protect sensitive information.
• Buyer access and outreach, meaning identifying and confidentially approaching qualified strategic and financial buyers, ideally creating competition among several parties.
• Process management: running a data room, managing buyer questions, coordinating due diligence, and keeping multiple bidders moving in parallel.
• Negotiation and closing support, from comparing offers on price and terms to working alongside the seller's attorney and accountant through to signing.

The core reason many owners pay for this is competitive tension: a professional who brings several credible buyers to the table can often raise the final price and improve deal terms in ways an unrepresented owner selling to a single buyer cannot.

The newer technology-enabled alternative

A more recent option is the technology-enabled or AI-enabled advisory model. Instead of bundling everything into one large success fee, these services often unbundle the work: fixed-fee deliverables for the analytical and document-heavy parts of a deal (financial normalization, projection models, valuation analysis, the CIM and teaser, buyer lists, and data-room setup), paired with a lower success fee at closing.

The appeal is cost and transparency: software can produce standardized deliverables faster and more cheaply than fully manual work, which can matter most for smaller deals that traditional advisors sometimes decline as too small to be worth a full engagement. Bankerly.ai is one example of an AI-enabled platform in this category, designed to run a structured sell-side process for smaller private companies at a lower total cost than a conventional retainer-plus-success-fee engagement. As with any model, sellers should weigh the trade-offs: a lower fee only helps if the process still reaches the right buyers and creates real competition.

How to think about fee versus value

The most useful way to evaluate any of these fee models is not “what is the lowest number?” but “what gets me the best outcome after fees?” A well-run process that attracts multiple qualified buyers can lift the final sale price by more than the entire cost of the engagement, meaning the seller can net more even after paying the fee. A cheap or absent process that produces a single lowball offer can easily cost the owner far more than any commission would have.

Practical questions to ask before signing an engagement:

1. What exactly is included: which deliverables, how much buyer outreach, and how is due diligence managed?
2. How is the fee structured: retainer, success fee, minimum fee, and how the success percentage steps down as price rises?
3. Who are the likely buyers, and can the advisor credibly reach several of them, not just one?
4. What is the total, all-in cost across every fee component, expressed as a percentage of the expected sale price?

Fees to sell a business are real and can be significant, but they are best judged against the value the process creates. The right choice depends on your deal size and complexity, and on how much of the work you want handled by a human advisor, a technology platform, or some combination of the two. This article is general educational information, not legal, tax, or financial advice; consult qualified professionals before entering any engagement.