M&A Fee Guide
One of the key questions from clients is ‘how much does it cost to sell a company?’ The overall fees to sell a company are typically a blend of M&A (or corporate finance) fees, legal fees and accounting & tax advisory fees. Our video below discusses these in some detail.
So what are the actual fee levels when you instruct an M&A firm to sell your company?
Our own fees are set out with each client and reflect the level of work and risk involved in the company sale process. Whilst we will not detail our own fees in this article, we do benchmark the market to ensure we are competitive with market practice in the quality mid-market advisory space.
As a company contributor to Firmex in their annual M&A surveys, their most recent report highlights key trends in advisory fees for middle-market mergers and acquisitions across all key global regions including the UK. This provides a useful backdrop to understanding the average fee rate that one would expect to see from good M&A and corporate finance firms.
Summarising their findings, the Firmex Global M&A Fee Guide 2024 provides a comprehensive analysis of how middle-market investment bankers and M&A advisors structured their fees over the past year. With global economic uncertainty, higher interest rates, and longer deal cycles, firms have adjusted their fee models to maintain profitability and reduce risk. Nearly half of respondents reported raising fees, reflecting both increased costs and a changing deal environment.
The summary below is based on Firmex Global M&A Fee Guide 2024:
Key Trends in M&A Advisory Fees
Shift Toward Retainer-Based Fees:
Traditional success-based fees, which were once dominant, have become less reliable due to longer deal closures and greater deal uncertainty. Many firms are now using monthly retainers or milestone-based engagement fees to secure steady revenue.
Success Fee Adjustments:
While success fees remain the industry standard, they are increasingly structured with tiered models (such as the Lehman Formula, where percentages decrease as deal value increases) or accelerator incentives (where fees rise if a higher valuation is achieved).
Rising Costs Drive Fee Increases:
Over 35% of firms increased retainers, and 22% raised success fees, mainly to cover higher operational expenses. Advisors in Europe were more likely to raise fees than those in North America.
Smaller Firms More Resilient:
While larger investment banks struggled with declining M&A volume, smaller advisory firms were able to maintain or grow revenue, benefiting from their agility and flexible pricing models.
Clients More Accepting of Higher Fees:
Business owners increasingly recognise the value of experienced M&A advisors in a complex market.
Typical Fee Structures
Engagement Fees:
- Most advisors charge $5,000–$10,000 per month in retainers, with larger firms charging up to $15,000 per month.
- Fixed upfront retainers (lump sums) are less common, replaced by milestone-based fees tied to transaction progress.
- Some firms deduct retainers from final success fees, while others charge them as non-refundable payments.
Success Fees:
- Lehman Formula remains the most popular structure (declining percentage as deal size increases).
- Flat success fees are used by 32% of advisors, while accelerator models (higher fees for exceeding price targets) are growing in popularity.
- The average success fee ranges from 5.5% for a $5M deal to 2.1% for a $100M deal.
Breakup Fees & Expense Reimbursement:
- 29% of firms now charge breakup fees, mainly in Europe.
- Travel and other deal-related expenses are commonly reimbursed, though data room costs are often absorbed by the firm.
Note: The Firmex report provides data in USD. For UK companies, the values above can be adjusted using $1.0 = £0.8 or simply divide the above numbers by 1.25.
Market Outlook & Conclusion
Looking ahead, 2025 is expected to see continued innovation in fee structures, with a greater emphasis on performance-based pricing and risk mitigation strategies. As deals grow more complex, advisors will need to balance competitive pricing with sustainable revenue models.
If you would like to discuss your plans for a company sale in strict confidence, why not call us for a conversation?
Tags: company, cost, Fee Guide, Fees, M&A, sell
