ACQUIREMANWhat does a sell-side M&A advisor do?
A sell-side advisor helps a business owner sell their company. Typical work includes:
- valuation analysis and positioning;
- preparing the teaser, information memorandum and financial model;
- identifying and approaching buyers confidentially;
- running a competitive process to maximise price and terms;
- negotiating the letter of intent and supporting the definitive agreements;
- coordinating due diligence and other advisers through to closing.
The main fee components
| Fee | What it is | Typical approach |
|---|---|---|
| Retainer | Upfront or monthly fee for preparation and work regardless of outcome | Often credited against the success fee on closing |
| Success fee | Percentage of transaction value paid only when the deal closes | The largest part of total fees |
| Minimum fee | A floor on the success fee | Protects advisors on smaller deals |
| Expenses | Travel, data room, research costs | Reimbursed, ideally with a cap |
| Tail fee | Success fee still due if a buyer introduced by the advisor closes after the engagement ends | Typically 12–24 months |
How success fees are calculated
Flat percentage
A single percentage of the transaction value. As a broad guide, percentages are higher for smaller deals and lower for larger ones — small deals can see mid-to-high single-digit percentages, while large deals are often in the low single digits or below. Every engagement is negotiated.
The Lehman formula
A traditional tiered scale on transaction value:
| Portion of transaction value | Fee |
|---|---|
| First 1 million | 5% |
| Second 1 million | 4% |
| Third 1 million | 3% |
| Fourth 1 million | 2% |
| Above 4 million | 1% |
Because the original amounts are small for modern deals, advisors often use the Double Lehman (doubling the percentages) or a Modern Lehman with larger brackets. Treat these as reference points, not rules.
Incentive (ratchet) fees
Some engagements pay a higher percentage on value achieved above an agreed target price. This aligns the advisor with getting you a better price, not just any deal.
Key terms to negotiate in the engagement letter
- Definition of transaction value — does it include debt assumed, earn-outs, deferred consideration, retention bonuses and the value of shares received? Agree when fees on contingent payments are due (usually when the seller receives them).
- Exclusivity and term — typically 6–12 months, with the right to terminate for cause.
- Tail period — limit it to buyers the advisor actually introduced or engaged with, and list them on termination.
- Retainer credit — retainers credited against the success fee.
- Expense cap and pre-approval for large expenses.
- Scope — what happens if the outcome is a fundraise, partial sale or merger instead of a full sale.
M&A advisor vs business broker vs marketplace
| M&A advisor / boutique bank | Business broker | Online marketplace | |
|---|---|---|---|
| Best for | Mid-size and larger, complex deals | Small, owner-operated businesses | Visibility to many buyers; smaller or digital businesses |
| Process | Targeted, confidential, negotiated | Listing and matching | Listing, filtering, direct contact |
| Fees | Retainer + success fee | Mostly success fee | Listing fees and/or success fees |
Acquireman combines a curated marketplace with advisory support: businesses are listed confidentially to verified buyers and investors, and sellers who need hands-on help can engage our advisory team under a separate agreement. Acquireman is not a broker-dealer or investment adviser — see our Terms of Use.
How to choose the right advisor
- Sector expertise — do they understand AI, SaaS or your specific market?
- Buyer network — can they name relevant strategic and financial buyers?
- Track record — completed deals of similar size, with references.
- Team — who will actually work on your deal day to day?
- Process — how they create competition and protect confidentiality.
- Alignment — fee structure that rewards a better outcome, not just a quick one.
Next step
Before you engage an advisor, get a clear view of your own readiness — try the free M&A readiness report from Acquireman AI — or book a consultation to discuss your options with our advisory team.
Frequently asked questions
How much do M&A advisors charge?
Most charge a retainer plus a success fee paid on closing. Success fees are a percentage of transaction value — higher for smaller deals and lower for larger ones — and engagements often include a minimum fee.
What is the Lehman formula?
A tiered fee scale: 5% of the first 1 million of transaction value, 4% of the second, 3% of the third, 2% of the fourth and 1% of the rest. Variants such as the Double Lehman are common for modern deal sizes.
What is a tail period in an M&A engagement?
A period after the engagement ends — often 12 to 24 months — during which the advisor is still owed a success fee if a buyer it introduced completes a deal.
Is a business broker the same as an M&A advisor?
Not quite. Business brokers usually handle smaller businesses through listings and matching, while M&A advisors run targeted, negotiated processes for larger or more complex deals.
This article is general information for educational purposes, current as of 11 October 2026. It is not legal, tax, financial or investment advice. Laws, regulations and market conditions change — consult qualified professionals before acting. Acquireman is a marketplace and advisory platform; see our Terms of Use.