When considering a sale, one of the first questions owners ask is: “How much do brokers charge to sell a business?”
It’s a natural starting point. Broker fees can vary significantly based on deal size, services offered, and how those services are structured. Some brokers charge large upfront fees. Others work entirely on commission. And many firms fall somewhere in between.
More importantly, what you pay isn’t the only thing that matters. Who you hire, how they work, and how well their incentives align with yours can have just as much impact on your exit as the fee itself.
This article walks through what brokers typically charge, how M&A advisors like Marsh Creek structure their engagements, and what business owners should consider before signing a contract.
What Is a Business Broker?
A business broker is a professional who helps owners sell their privately held company. Brokers can assist with everything from preparing marketing materials and valuing the business to identifying buyers and managing negotiations.
The term “broker” can mean different things depending on the size of the business being sold. For very small, local transactions (typically under $1 million), brokers may simply list the business and match it with a buyer. But in the lower middle market ($5M–$50M+), the process is far more involved.
Some businesses prefer the term M&A advisor. It reflects a broader role that includes strategic guidance, rigorous buyer vetting, deal structuring, and hands-on support from start to finish. Selling a business is a one-time event for most owners. The right advisor helps you do it right.
Is Hiring a Business Broker Worth It?
While some owners consider selling on their own, the stakes in a business sale are high, and mistakes are costly. A well-prepared and professionally managed sale process typically leads to more favorable terms and fewer surprises along the way.
A qualified advisor can help you:
- Understand the current market for your business
- Prepare financials and positioning materials that resonate with buyers
- Create competitive tension among qualified acquirers
- Negotiate favorable terms around valuation, structure, and risk
- Avoid deal fatigue, retrades, and failed closings
Broker fees may seem like a large expense, but they are typically offset by the value of finding a better deal that matches the financial and personal aims of the seller.
Common Broker Fee Structures
When it comes to how much brokers charge to sell a business, compensation varies, but most follow one of three general models:
1. Upfront Fee + Success Fee
This is the most common structure in the market. The advisor charges a non-refundable engagement fee (often $10K–$50K) at the start of the process, then earns a success fee if the business is sold.
The upfront fee typically covers work like:
- Conducting a valuation
- Preparing marketing materials
- Identifying and contacting buyers
- Managing early diligence
The success fee is a percentage of the final deal value and is only paid upon closing.
2. Flat Fee
Some brokers, particularly in smaller Main Street transactions, offer a fixed-fee model. This can simplify things for sellers but doesn’t always scale well to larger, more complex deals. It can also misalign incentives if the advisor is paid the same whether the deal closes or not.
3. Commission-Only
In smaller deals, some brokers offer a commission-only arrangement. While this may sound appealing, in certain circumstances it can cause advisors to take on too many listings or to prioritize speed over strategy. Without an upfront commitment, service levels may vary.
Regardless of the model, it’s important to ask what’s included. Some firms charge extra for valuation work. Others include it in the engagement. At Marsh Creek, valuation is provided at no cost.
The Double Lehman Formula
At Marsh Creek, we use a widely accepted M&A fee model known as the Double Lehman formula. It’s a tiered success fee structure that adjusts as deal size increases.
Here’s the breakdown:
- 10% on the first $1 million of deal value
- 8% on the second million
- 6% on the third million
- 4% on the fourth million
- 3% on anything above $4 million
For example, if a company sells for $2 million:
- The first $1M = $100K (10%)
- The second $1M = $80K (8%)
Total commission = $180,000
This tiered approach ensures that sellers aren’t penalized for growing value. As the deal size increases, the effective fee percentage declines. It’s designed to reward performance while keeping overall costs in check.
We also charge a one-time $10,000 development fee to cover preparation. But unlike many firms, we do not charge for the valuation, and the success fee only applies if a deal closes.
Factors That Influence Broker Fees
The actual fee a seller pays depends on several factors beyond just the percentage.
Deal Size
Larger deals usually carry lower percentage fees but higher total amounts. For example, a $10M deal at 3% equals $300K, while a $2M deal at 8% equals $160K.
Complexity
A business with clean books and straightforward operations is easier to sell than one with outdated systems, disorganized records, or ownership complications. More complexity means more advisory effort and potentially higher fees.
Industry Type
Some industries attract more buyers. Others require more niche outreach. If the buyer pool is small or strategic, fees may reflect the effort required to find and vet the right fit.
Scope of Services
Some brokers focus narrowly on matchmaking. Others take a hands-on approach: preparing materials, vetting buyers, coordinating diligence, and guiding negotiations. More service often justifies more cost, especially if it leads to better outcomes.
Understanding these variables helps explain why one broker might charge more than another, and how to evaluate if the fee is reasonable for the value provided.
Going Beyond Price: Why “How Much” Isn’t the Only Question
It’s natural to ask how much brokers charge to sell a business. But it’s just one piece of the puzzle.
In reality, the wrong advisor can cost far more than their fee: through a poorly structured deal, a retrade during diligence, or a failed closing.
The right advisor helps you:
- Maximize total value, not just price
- Structure the deal to protect your downside
- Reduce surprises during diligence
- Move through the process with confidence and control
Instead of asking, “What’s the cheapest option?” consider:
- Who will best represent my interests
- Who has a proven process and strong track record
- Who will help you exit on your terms
The value of trusted guidance often outweighs savings from a lower fee.
Questions to Ask Before You Sign
Before hiring a business broker or M&A advisor, ask these five questions to protect yourself and ensure alignment:
- What are all the fees, and when are they due? Get clarity on upfront fees, success fees, and any hidden costs.
- How is deal value defined? Make sure the fee is calculated fairly, including what does (and doesn’t) count.
- What is your tail period, and who does it apply to? Some firms use bulk buyer lists or indefinite tails. Marsh Creek applies its tail only to buyers who signed NDAs during the active engagement.
- Who will run my deal? Ask whether you’ll be working with senior advisors or passed off to junior staff.
- What happens if the deal doesn’t close? Understand your obligations and whether you’ll still owe any fees.
Asking these questions early helps ensure a transparent relationship and avoids surprises down the line.
Conclusion
Asking how much brokers charge to sell a business is only one part of a larger process to exit on your terms and get a favorable deal for your business.
Broker fees themselves depend on deal size, service level, and fee structure. However, evaluating the deal process and deciding whether a broker or advisor is the right fit for your goals are larger considerations to keep in mind.
At Marsh Creek, the model we use is simple: low up-front fees, a transparent success-based commission, and a process designed to protect and support the seller at every stage.
If you’re thinking about a future sale, schedule a confidential consultation to learn what a fair, aligned engagement looks like, and what’s possible when you sell your business on your terms.