Business Broker’s commissions often vary depending on many different factors. However, the most significant factor in the cost of a broker is the size of the business.

Brokers can also charge clients varying types of fees:

Retainers – Flat fees buyers pay as one upfront payment or as a monthly charge. Middle Market M&A firms can charge between $15,000 to $30,000.

Valuation Fees – A flat fee for conducting a business valuation. They can cost between $7,000 to $20,000, depending on the firm's size.

Success Fee (commission) – A percentage fee on the sale of your business that is paid once the deal is closed.

Minimum Contract Length – Most brokers will require you to sign a minimum contract of 6-12 months. These contracts can have large fees for clients that want to step away from the contract.

Business can be divided into three different size categories:

Main Street Business: ~$1M in revenue

Main Street businesses often have the least complex transactions. These businesses are usually handled by “Main Street” brokers who do not charge any upfront or retention fees. In some states, they are legally not required to charge you any upfront or retention fees.

Main Street brokers charge 10% to 12% of the business's value and an additional 6% on any associated real estate. Often, these brokers also have a minimum commission fee ranging from $10,000 to $20,000.

Lower Middle Market: $1 million - $25 million in revenue

In this size category, some brokers may potentially charge retainers and most commonly have a minimum commission fee ranging from $35,000 to $50,000.

Lower Middle Market brokers can often charge their clients using two methods: the Double Lehman Scale and a flat commission.

The Double Lehman Scale– The more frequently used method, the double Lehman scale, originated from the Lehman Brothers. In this method, the charges to a client are made in stages:

10% on the first million, plus
8% on the second million, plus
6% on the third million, plus
4% on the fourth million, plus
2% on any remaining amount.

A flat commission—Sometimes, broker firms charge a flat commission of 4-6% on the total purchase price of the business.

Middle Market Mergers and Acquisitions: Over $25 million in revenue

At the Middle Market M&A level, you can hire a middle-market advisor, a merger and acquisitions firm, or approach an Investment bank. At this level, retainers are common, ranging from $5,000 to $15,000 upfront or in monthly payments.

Middle Market advisors and Investment Banks can charge a flat fee anywhere from 1-4% or a variation of the Lehman formula for administering the sale of your business. As the sale price of your business increases, the percentage charged by advisors and banks decreases. In some cases involving large companies, you could be charged less than 1% when the sale price is extremely large.

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