How much does an M&A advisor cost when selling a company?

There is no single market rate card for M&A advisory fees. In practice, pay depends on the value and complexity of the transaction, the scope of the mandate, the risk inherent in the process, the type of investors involved, and how much work the advisor has to put in before a real chance of closing emerges.

In the European mid-market, the dominant models pay part of the fee during the process and make the bulk of it contingent on success. The Firmex/DealCircle Europe M&A Fee Guide 2024-25 shows that only 12% of the firms surveyed charged no work fee or retainer at all. At the same time, the success fee remains the central element of a mandate’s economics. In Poland, too, the typical model is a monthly retainer combined with a success fee payable at closing.

The most common model: retainer + success fee

The simplest way to split a deal advisor’s fee is into two parts:

• retainer – pay for preparing and running the process,
• success fee – pay contingent on the deal closing.

This structure separates the cost of the actual work from the reward for the outcome. A company sale process can run for many months, requiring materials, buyer analysis, outreach, negotiation and due diligence support, yet still fail to close. The retainer offsets part of that risk for the advisor, while the success fee keeps a strong economic link between the deal’s success and the fee.

How large is the success fee?

The key relationship is simple: the success fee percentage typically falls as deal value rises. That is because the cost of working on a deal twice the size does not grow proportionally with the value of the business.

In the European Firmex/DealCircle survey, the effective success fee advisors reported averaged roughly:

Source: Firmex / DealCircle, Europe M&A Fee Guide 2024-25.

This data is a benchmark for the European mid-market, not a rate card for any specific market or mandate. The percentage can be meaningfully higher for small, difficult or labour-intensive processes, and lower for large, relatively straightforward transactions.

Flat rate, Lehman formula, or accelerator?

The percentage alone does not describe how the fee is calculated. Three basic structures are common in the market.

1. Flat percentage

The simplest variant: e.g. 2.5% of deal value regardless of the final amount. It is transparent, but it does not always create an extra incentive to negotiate a price significantly above the owner’s expectations.

2. Declining formula – the Lehman scale and its variants

In the classic version, the commission percentage falls for successive value bands of the transaction. The mechanism reflects a falling percentage cost of service as deal value rises. In the 2024 Firmex/DealCircle survey, 40% of European advisors used a structure where the success fee percentage decreases for larger deals.

3. Accelerator

In an accelerator model, the rate rises once an agreed price threshold is crossed. For example, the parties might set a base success fee up to $10m in value and a higher percentage on the amount above $10m. The economic logic is simple: reward the advisor for a result that exceeds an agreed benchmark.

Both structures coexist in the market, but at different scale: 40% of European advisors use a declining formula, and 22% an increasing one. The remainder rely on flat rates or hybrid arrangements.

Source: Firmex / DealCircle, Europe M&A Fee Guide 2024-25.

Why do advisors charge a retainer?

A retainer should not be confused with a fee for simply “starting the conversation.” In a full sell-side mandate, it typically covers part of the cost of preparing and running the process: business analysis, transaction materials, building the buyer list, market outreach, running the process, offer analysis, negotiation and coordinating each stage.

The retainer also covers the risk that the process fails to close for reasons outside the advisor’s control – the seller may change their mind, find the offers unsatisfactory, or pause the process for family or business reasons. The advisor has by then done the full work, but no success fee arises. An alternative is a break-up fee, payable when the seller withdraws at an advanced stage of the process – in that case part of this risk is covered separately and the retainer can be correspondingly lower.

The European survey shows wide variation in how the work fee is charged: firms use monthly retainers, one-off flat fees, milestone fees, and hourly billing. There is no single model that qualifies as the standard for every transaction.

How large is the retainer?

The retainer remains a standard component of M&A advisor pay, though its structure is not uniform.

Source: Firmex / DealCircle, Europe M&A Fee Guide 2024–25.

The most common monthly retainer was $5,000–10,000. In 2024, 30% of respondents charged less than $5,000 a month. More than half of advisors using a one-off flat fee retainer, in turn, quoted it below $15,000. The general pattern observed in the survey: higher rates were more common at larger firms and where the minimum deal value handled was higher.

Source: Firmex / DealCircle, Europe M&A Fee Guide 2024–25.

Source: Firmex / DealCircle, Europe M&A Fee Guide 2024–25.

Does the retainer offset the success fee?

This is an important point in the engagement letter. In a creditable retainer model, some or all of the work fees paid earlier are credited against the success fee due at closing. In a non-creditable model, both elements are due independently.

In the Firmex/DealCircle survey, 49% of European firms reported in 2024 that they credit work fees against the success fee.

Minimum success fee

On smaller transactions, a pure percentage of company value may not match the effort needed to run a professional process. That is why a minimum success fee is a very common feature.

Firmex/DealCircle shows that 76% of European advisory firms active in mid-market M&A used a minimum success fee in 2024. In practice, this means the fee equals the higher of two figures: the amount from the percentage formula, or the agreed minimum.

Source: Firmex / DealCircle, Europe M&A Fee Guide 2024-25.

What is the success fee calculated on?

This is one of the most practical, and sometimes overlooked, points in an advisor’s contract. A clause that simply says “2% of deal value” is not enough if the parties do not agree on what deal value means.

The engagement letter should clearly define whether the fee base is:

• Enterprise Value or Equity Value,
• cash paid at closing only,
• deferred consideration or a vendor loan as well,
• an earn-out – and if so, whether the fee is payable immediately or only when the earn-out is actually paid,
• rollover equity retained by the seller after the deal,
• other economic benefits received by the seller.

On a deal with $7.5m paid at closing, $2.5m of earn-out and $1.25m of rollover equity, the success fee base can be $7.5m, $10m or $11.25m – depending on the agreed definition.

When is the success fee paid on an earn-out?

Practice is not uniform here either. The Europe M&A Fee Guide 2024-25 shows that 51% of respondents expected the full success fee paid at closing regardless of when the seller receives each element of the price. 44% linked part of the fee to the point at which the seller actually receives deferred price elements, such as an earn-out.

Source: Firmex / DealCircle, Europe M&A Fee Guide 2024-25.

For a business owner, this is an important point of negotiation in the mandate, especially where a large part of the price is contingent or deferred.

Additional costs

Beyond the retainer and success fee, the contract may provide for reimbursement of certain external costs. In the European survey, 74% of firms passed travel costs on to the client, and 64% passed on virtual data room costs. The scope of costs should be known before the process starts, and larger expenses may be subject to prior client approval.

A separate category is the cost of external expert work – tax advice, legal support for the transaction, or preparing vendor due diligence. These normally sit with the seller and are billed directly by the service providers, unless the advisor’s contract explicitly states that the advisor covers them within the agreed fee. It is worth settling this before the process starts – on larger deals these amounts are material to the total cost of selling the company.

Is the cheapest advisor the best choice?

No. Just as a higher rate does not automatically mean a better advisor.

When choosing an advisor, it is worth looking beyond the success fee percentage to who will actually run the process, what the scope of work looks like, how the buyer list is built, whether the advisor actively reaches out to investors, how they manage competition between buyers, and what role they take on in negotiation and due diligence.

A one-percentage-point difference in the success fee may be economically secondary compared with a difference in price or deal structure. On the other hand, a high rate is not justified if the mandate essentially amounts to introducing the client to a handful of well-known investors.

How to evaluate an M&A advisor’s proposal?

Before signing an engagement letter, it is worth comparing at least:

Pay should support the right outcome

A good fee structure should not reward the advisor for activity alone, or create pressure to close any deal. It should balance the real cost of running a months-long process with a meaningful share of pay contingent on success and the quality of the outcome.

More useful than “what percentage does the advisor charge?” is the question: “what exactly am I paying for, when am I paying it, and is the advisor’s economic interest aligned with mine as the seller?”