Selling a business is a major decision, and understanding how much brokers charge is crucial. Many business owners underestimate the impact of fees on their final proceeds. Broker costs vary widely, depending on factors like the size of your business, the industry, and the experience of the brokerage firm you choose. A small, local business will usually incur different fees than a mid-sized or larger company sold through a specialized M&A advisor.
Knowing what to expect helps you plan your sale realistically and avoid surprises at closing. It also lets you compare brokers confidently and negotiate a fair deal. While some brokers charge a flat retainer, others earn a success fee or commission based on the sale price.
In this guide, we’ll break down typical fee structures, show how business size affects costs, and provide examples you can use to estimate what a broker might charge. By the end, you’ll have a clear picture of what selling your business could cost.
How Business Brokers Typically Get Paid
When selling a business, it’s important to know how brokers charge. Most fees fall into two main categories: success fees and retainers.
Success Fees (Commissions)
The most common approach is a success fee, also called a commission. This is a percentage of the final sale price and is usually paid only when the deal closes. It aligns the broker’s incentives with your goal: a higher sale price. Commissions vary by business size and broker experience, but they often range from 5% to 10% for smaller businesses.
Retainers and Flat Fees
Some brokers charge a retainer or flat fee upfront or monthly. This is more common with larger businesses or complex transactions. Retainers cover the broker’s initial work, including valuations, marketing, and strategy planning. While they guarantee professional support, they also add to the total cost, so it’s important to weigh them carefully.
Choosing the Right Payment Structure
Choosing between a success fee and retainer depends on your business size, complexity, and cash flow. Small businesses often benefit from commission-based structures, while larger deals may justify a retainer for dedicated attention. Understanding the options helps avoid overpaying and ensures your broker is motivated to achieve the best sale.
How Business Size Influences Broker Fees
The size of your business plays a big role in determining broker fees. Fees generally increase with deal complexity, but the percentage charged usually decreases for larger transactions.
Main Street Businesses (Up to $1M revenue)
For small businesses, brokers typically charge 8%–10% of the sale price. Some may charge less if the business includes real estate, usually 4%–6%. Many brokers also have a minimum fee. Often between $10,000 and $15,000, to cover the work involved in smaller deals.
Lower Middle Market Businesses ($1M–$50M revenue)
Businesses in this range often use the “Double Lehman” formula: 10% on the first $1M, 8% on the next $1M, 6% on the third, 4% on the fourth, and 2% for amounts above $4M. Some brokers offer flat-rate commissions instead. Retainers may also be charged, particularly for more complex deals or higher-value transactions. Minimum fees often range from $35,000 to $50,000.
Middle Market Businesses (Over $25M revenue)
For larger companies, fees drop to 1%–4% of the sale price. Middle-market brokers or M&A firms handle these deals, which may involve earnouts, minority buyouts, or international buyers. Retainers are common, ranging from $5,000 to $50,000 or more. Because these deals are complex, fees are structured to reflect the broker’s experience and the work involved.
How Much Do Brokers Charge to Sell a Business?
Selling a business is one of the biggest financial decisions an owner can make. Understanding broker fees is essential to avoid surprises and plan effectively. These costs are not one-size-fits-all. Fees vary depending on your business size, industry, complexity, and the experience of your broker.
For smaller businesses, commissions are usually straightforward, but as businesses grow, fee structures can become more complex. M&A firms handling large deals may charge lower percentages but higher retainers. The type of broker you choose, whether a Main Street broker, a MidStreet advisor, or a middle-market M&A firm, will also affect costs.
This guide explains how brokers normally get paid, how business size affects fees, factors that influence costs, and strategies to minimize fees without sacrificing value. By the end, you’ll have a clearer picture of what to expect when selling your business and how to plan for broker charges to protect your profits.
How Business Brokers Typically Get Paid
Success Fees (Commissions)
Most brokers earn a success fee, which a commission is based on the final sale price of your business. These fees are usually paid at closing and are the largest portion of the cost. For small businesses, typical rates range from 8–10% of the sale price, while larger transactions may use tiered percentages or flat fees.
Retainers and Flat Fees
Some brokers charge retainers, either upfront or monthly, especially for larger or complex deals. Retainers cover initial work like valuations, marketing, and advisory services. Understanding whether your broker requires a retainer and how it’s applied is essential to avoid overpaying.
Choosing the Right Payment Structure
Deciding between success fees, retainers, or a combination depends on your business size, deal complexity, and risk tolerance. Always clarify the fee structure before signing an agreement. This ensures transparency and protects your bottom line.
How Business Size Influences Broker Fees
Main Street Businesses (Up to $1M revenue)
If your business earns $1 million or less, expect a commission of 8–10%. Many brokers do not charge retainers at this level. Minimum fees typically range from $10,000–$15,000. Selling real estate alongside your business may reduce commissions slightly, often to 4–6%. Franchised brokers like Sunbelt or VR Business Brokers handle most Main Street deals.
Lower Middle Market Businesses ($1M–$50M revenue)
Businesses in this range are often handled by experienced brokerage firms or boutique M&A advisors. The “Double Lehman” formula is common: 10% on the first $1M, 8% on the second, 6% on the third, 4% on the fourth, and 2% on everything above $4M. Flat-rate commissions may also be negotiated. Retainers may be requested, and minimum commissions often range from $35,000–$50,000.
Middle Market Businesses (Over $25M revenue)
For large businesses, fees are lower in percentage terms, usually 1–4%. M&A firms handle these transactions and may charge significant retainers, often ranging from $5,000 to $50,000 or more. Middle-market deals can be complex, sometimes involving earnouts or minority buyouts, which may influence final broker fees.
Factors That Can Affect Broker Charges
Business Complexity
Multi-location, franchise, or highly regulated businesses usually require more broker effort, increasing fees.
Industry and Market Conditions
Fewer buyers or slow markets may result in higher fees, while competitive sectors can reduce costs.
Broker Experience and Negotiation Skills
Experienced brokers often charge more but may sell at a higher price. Negotiating fees upfront ensures fairness.
Legal and Financial Advisors
Involvement of lawyers, accountants, or financial consultants can add to total costs. Coordinating these advisors through a broker often increases efficiency but also affects fees.
Calculating Estimated Broker Fees
Small Business Example
Sale Price: $500,000
Commission: 10%
Fee: $50,000
Lower Middle Market Example
Sale Price: $5M
Using Double Lehman:
10% of first $1M = $100,000
8% of next $1M = $80,000
6% of next $1M = $60,000
4% of next $1M = $40,000
2% of last $1M = $20,000
Total Fee: $300,000
Middle Market Example
Sale Price: $30M
Typical Commission: 2%
Estimated Fee: $600,000
These examples show why negotiation is key. Brokers may offer flat fees or alternative structures, but knowing estimated percentages helps plan your sale strategy.
Tips for Minimizing Broker Costs Without Compromising Value
Compare Multiple Brokers: Collect quotes and assess experience to find the best fit.
Clarify Success Fees Upfront: Confirm percentages, minimums, and payment timing.
Avoid Unnecessary Retainers: Small businesses rarely need upfront fees.
Prepare Accurate Financials: Clean, organized records reduce broker time and risk. A well-prepared business can sell faster and sometimes at a higher price.
Conclusion
Knowing how much brokers charge is essential to selling a business successfully. By understanding fees, payment structures, and influencing factors, business owners can plan effectively. Preparing financials, negotiating commissions, and choosing the right broker ensures you minimize costs while maximizing your sale price. Being informed empowers owners to make confident, profitable decisions.
Frequently Asked Questions (FAQ)
Business brokers usually charge a success fee, which is a percentage of the final sale price. Some also request a retainer or flat fee, depending on the size, complexity, and industry of your business.
A success fee is a commission paid after the business sale closes. It is typically a percentage of the total sale price. Small businesses often see rates of 8–10%, while larger businesses may have lower percentages with additional fees.
Retainers are common for larger transactions or complex deals. Smaller businesses often avoid upfront fees. It’s essential to clarify any retainer or monthly charges before hiring a broker to prevent unexpected costs.
Small businesses usually pay higher percentage fees. Lower middle-market and middle-market businesses often pay smaller percentages, sometimes combined with flat fees or tiered commission structures. Business size strongly influences the overall cost of selling.
Yes, broker fees are negotiable. Discuss percentages, retainers, and minimum commissions upfront. Comparing multiple brokers and clearly defining the payment structure can help lower costs without reducing the value or quality of the sale process.
Broker fees can rise due to business complexity, high-risk industries, competitive markets, legal or financial advisory involvement, and the experience of the broker. These factors affect the time, risk, and resources required to complete the sale.
Prepare accurate financials, avoid unnecessary retainers, and clarify commission structures upfront. Comparing multiple brokers and choosing one with transparent fees can reduce costs while ensuring the business is sold efficiently and for the best possible price.