How Much Do M&A Advisors Charge? A Founder’s Guide to M&A Advisory Fees

Summary

Advisory fees are one of the largest transaction costs a founder pays when selling a business. M&A advisors charge in five main ways: retainers, success fees, minimum fees, hourly fees, and flat fees. Each structure has its own costs and trade-offs. The structure matters as much as the amount: An advisor paid only when a deal closes has a financial reason to keep it moving, even when waiting or walking away is the right answer. Hourly models avoid that conflict, and they often cost less than standard success fee rates, which typically run 3 to 6 percent of the transaction value.

In this article

• Why fee structure matters as much as the fee
• The five ways M&A advisors charge
• What the fee is calculated on
• Sell-side vs. buy-side fees, and M&A advisors vs. business brokers
• Fee agreement terms to read closely
• How to compare fee proposals
• Questions to ask before you sign
• Frequently asked questions

After you know what your company is worth, the next question is what it will cost to sell it. Advisory fees are one of the largest transaction costs a founder pays, yet they are rarely discussed openly until an engagement letter is on the table. Here is how M&A advisory fees work, what is typical, and where the real costs hide.

Why fee structure matters as much as the fee

Most fee discussions focus on the percentage. The bigger question is how the structure shapes the advice you get.

A success fee pays the advisor only when a deal closes. In Axial’s 2025/26 M&A Fee Guide, a survey of 331 lower middle market advisors, half of respondents collect the full success fee at closing, and 29 percent charge no upfront fee at all, so a closed deal is their only payday. About a quarter go further and charge a break-up fee if a client rejects a bona fide offer.

That creates a conflict at the moments that matter most. Sometimes the right advice is not to sell yet, because the business isn’t ready, the timing is wrong, or the offers don’t meet your goals. An advisor whose income depends on closing has a hard time giving that advice, and a break-up fee means that walking away from an offer costs you money. Independence means an advisor can tell you to wait or walk away without it costing them their fee.

The structure affects the cost, too. Hourly fees track the work performed rather than the sale price, so they often come in well below standard success fee rates. On a $50 million transaction, for example, Embarc Advisors’ total fees, including the full quality of earnings process, have come in around $500,000, roughly a third of the $1.6 million an average success fee would cost on a deal that size.

The five ways M&A advisors charge

1. Retainer fees. A monthly fee paid from the start of the engagement, whether or not a deal closes. Most advisors charge some form of upfront fee, either a monthly retainer (most commonly $5,000 to $10,000 per month) or a one-time engagement fee, and most credit it against the success fee at closing.

2. Success fees. A percentage of the transaction value, paid only at closing. Success fees typically run 3 to 6 percent for lower middle market deals, and the percentage falls as deal size rises. Many firms use a tiered formula, where the percentage steps down as the price rises; others charge a flat percentage or an accelerator that raises the percentage above a target price. The best-known tiered formula is the Lehman formula, developed at Lehman Brothers for large transactions: 5 percent of the first $1 million, 4 percent of the second, 3 percent of the third, 2 percent of the fourth, and 1 percent of everything above that. On lower middle market deals, the original formula produces low fees, so many advisors use the Double Lehman (10, 8, 6, 4, and 2 percent on the same tiers) or their own modified version.

In practice, the average success fees advisors report fall between the two, sliding from nearly 6 percent on a $5 million deal to about 3 percent at $50 million:

The smaller the deal, the larger the share of the sale price that goes to fees. Add a minimum fee, and the gap widens further. An earlier survey by Firmex found the same pattern, with average success fees of 6.3 percent on a $5 million deal and 3.8 percent on a $20 million deal.

Table source: Axial, North American M&A Fee Guide 2025/26. Dollar figures are our calculation. Download Axial’s full report for engagement fee levels, capital raise fees, and more.

3. Minimum fees. Most advisors set a minimum fee that applies no matter how small the deal. These minimums can reach $1 million or more. On a $10 million sale, a $1 million minimum is 10 percent of the deal, far above the typical range.

4. Hourly fees. The advisor bills for time spent on valuation, buyer outreach, diligence, and negotiation, much like a law firm. You see itemized invoices and can end the engagement without a tail fee. The trade-off is that you pay as work is performed, even if the deal does not close. Hourly billing is rare in M&A advisory: only 2 percent of advisors in the same Axial survey use it.

5. Flat fees. A fixed price for a defined piece of work, such as a valuation, a quality of earnings (QofE) report, or a sale-readiness assessment. Flat fees are common for discrete projects and less common for a full sale process.

Key point: Two proposals that both say “4 percent” can produce very different bills. The retainer, the minimum, and the definition of transaction value matter as much as the percentage.

What the fee is calculated on

Success fees are a percentage of “transaction value,” and the engagement letter defines that term. It often includes more than the cash you receive at closing:

• Debt the buyer assumes or pays off. A fee based on enterprise value includes debt, so you may pay a fee on money that goes to your lender, not to you.
• Earn-outs. Some agreements charge the fee on the full earn-out at closing, even though earn-outs are often paid out only in part.
• Rolled equity. If you keep a stake in the business, the fee may apply to its stated value, which you will not realize until a future exit.
• Escrows, holdbacks, and seller notes. Money you may never fully collect can still count toward the fee.

Ask every advisor to show you the fee on your expected cash proceeds, not just on the headline price.

Sell-side vs. buy-side fees

Sell-side advisors represent the owner selling the business. They prepare the company for sale, build marketing materials, run outreach to buyers, manage the process, and negotiate the deal. Sell-side work is where retainer-plus-success-fee structures are most common, and a typical process runs 6 to 12 months. Learn about our sell-side advisory.

Buy-side advisors help a company or investor find and acquire targets. Their fees often combine a retainer with a success fee based on the purchase price, or a project fee for specific work such as target search, diligence, and deal structuring. Learn about our buy-side advisory.

M&A advisors vs. business brokers

Business brokers and M&A advisors both help owners sell, but they work on different kinds of deals. Brokers typically handle small businesses, generally those valued under $2 million, list them for sale, and connect them with individual buyers. Commissions on those sales typically run 8 to 15 percent of the price, according to BizBuySell, often with a minimum fee on the smallest deals, and some brokers also charge upfront fees.

M&A advisors typically work on larger, more complex transactions. They run a structured process with strategic and private equity buyers, manage diligence and quality of earnings, and negotiate deal structure, including earn-outs, rolled equity, and working capital. Before comparing fees, confirm which kind of firm you are actually talking to.

Fee agreement terms to read closely

How to compare fee proposals

Compare total expected cost, not headline percentages. Here is an illustration for a $20 million sale with a 9-month process:

If that same firm has a $1 million minimum, the low end jumps to roughly $1.09 million. For an hourly or flat-fee advisor, ask for an estimated range based on deals of a similar size and complexity.

Questions to ask before you sign

1. What will my total fee be at the price I expect, and on my expected cash proceeds?
2. Is there a minimum fee, and how does it compare to the percentage at my deal size?
3. Are retainers credited against the success fee?
4. How long are the tail and exclusivity periods, and how do I end the agreement?
5. Who will actually work on my deal day to day?
6. How do you get paid if the best decision is to walk away from an offer?

That last question tells you a lot about incentives. For a deeper comparison of the two main models, see Great M&A Advisory Without Exorbitant Success Fees. For what to look for beyond fees, read How to Choose an M&A Advisor.

How Embarc Advisors charges

Embarc Advisors does not charge success fees. Our unique hourly-fee-based M&A advisory model enables us to provide these smaller businesses with the institutional-grade quality of service they deserve. Clients receive itemized invoices, with no tail fees or long-term exclusivity.

Reviewing an engagement letter or comparing fee proposals? Talk with our team about what your sale could cost under each model, and what you would actually take home.