How Much Does It Cost to Sell a Business?
The cost of selling a business: M&A advisory fees, broker commissions, and how AI-powered marketplaces reduce what you pay at close.
The cost of selling a business is one of the most common questions business owners ask — and one of the least transparently answered. Advisors often avoid discussing fees until you have already committed to a mandate. This article gives you a clear breakdown of what you will typically pay, how fee structures vary, and how AI-powered marketplace models are changing what the transaction costs.
Amafi is a confidential, AI-driven M&A matching marketplace: free to join for sellers, with a success fee paid only at close through a licensed advisor. If you want to see what selling through the marketplace looks like, start here.
What Traditional M&A Advisory Fees Look Like
The most common fee structure in M&A advisory is a success fee — a percentage of transaction value paid when a deal closes. In practice, most advisors also charge a monthly retainer from the day you sign the engagement letter until close.
Investment bank and M&A advisory success fees
For business sales with enterprise values above $10 million, investment banks and boutique M&A advisory firms typically charge:
| Deal size (EV) | Typical success fee |
|---|---|
| $5M – $25M | 5–8% |
| $25M – $75M | 3–6% |
| $75M – $200M | 2–4% |
| $200M+ | 1–3% |
These are indicative ranges. The actual percentage depends on deal complexity, the advisor’s track record in your sector, the level of competition among buyers, and whether the advisor charges using a Lehman formula (declining percentage by tranche) or a flat rate.
Many boutique advisors apply a modified Lehman formula — for example, 5% on the first $5 million of EV, 4% on the next $5 million, 3% on the balance — which can meaningfully reduce total fees on mid-market transactions.
Retainer fees
Monthly retainers typically range from $10,000 to $30,000 per month. A standard M&A process runs 6–12 months, meaning retainers can add $60,000–$360,000 to your total cost before the transaction closes. In some engagements, retainers are credited against the success fee at close; in others they are not.
Business brokers
For smaller business sales (EV under $5 million), business brokers typically charge:
| Deal type | Typical fee |
|---|---|
| Under $1M | 10–12% success fee, no retainer |
| $1M – $5M | 8–10% success fee, possible small retainer |
| Franchise or quick-sale | Flat fee $5,000–$20,000 |
Business brokers generally do not provide the structured process, buyer universe mapping, or negotiation support that an M&A advisor offers for larger transactions.
Additional Costs When Selling a Business
Beyond the advisory fee, sellers typically incur:
Legal fees — Negotiating the sale and purchase agreement (SPA), disclosure schedules, warranty and indemnity (W&I) negotiations, and conditions precedent typically cost $50,000–$200,000 or more for mid-market transactions. For complex cross-border deals, legal fees can exceed the advisory fee.
Accounting and financial due diligence preparation — Buyers typically require audited or reviewed financials and may commission a Quality of Earnings (QoE) report. Preparing these and responding to buyer diligence requests can cost $20,000–$80,000 in accounting fees.
Management time — The opportunity cost of senior management participating in the sale process is real but rarely quantified. A well-run M&A process takes 6–12 months and requires consistent management attention during buyer meetings, data room preparation, and diligence Q&A.
Data room setup — Traditional virtual data room (VDR) providers such as Ansarada or Datasite typically charge $3,000–$15,000 for a transaction. AI-native data rooms that automate Q&A responses are now available; Amafi’s AI-native VDR is included for sellers using the platform.
According to a 2024 PwC analysis of mid-market transaction costs in Asia Pacific, total transaction fees (advisory + legal + accounting) for deals in the $20–$100 million range typically represent 5–10% of enterprise value when all costs are included.
How the Lehman Formula Works
The Lehman formula is the most widely used method for calculating M&A success fees:
- Standard Lehman: 5% on the first $1 million, 4% on the second million, 3% on the third, 2% on the fourth, 1% on the balance
- Modern Lehman (more common): 5% on the first $5 million, 4% on the next $5 million, 3% on the next $10 million, 2% on the next $30 million, 1% on the balance
For a $50 million transaction under modern Lehman: 5% × $5M ($250,000) + 4% × $5M ($200,000) + 3% × $10M ($300,000) + 2% × $30M ($600,000) = $1,350,000 total advisory fee.
Success fees are payable at closing, out of proceeds. You do not write a cheque from your own pocket — the fee is deducted from the transaction consideration.
How AI Is Changing the Cost of Selling a Business
AI-native platforms are restructuring M&A economics in two ways: by reducing the cost of advisory work through automation, and by enabling success-only fee models with no upfront payment.
Automation reduces preparation time
Generating a Confidential Information Memorandum (CIM) has traditionally taken 4–8 weeks of advisor time, costing $30,000–$80,000 in the engagement. AI-native document generation reduces this to hours. The same applies to financial modelling, buyer universe mapping, and teaser preparation. When the platform does this work, the advisor’s marginal cost drops — and the fee structure can reflect that.
Success-only models eliminate upfront risk
Traditional retainers are paid regardless of outcome. If a deal falls through after 10 months, the business owner has paid $100,000–$300,000 in retainers with nothing to show for it. AI-powered marketplace models shift the entire fee to close — you pay nothing unless the transaction succeeds.
Broader buyer reach at lower cost
A traditional M&A process reaches 20–50 buyers through the advisor’s network. An AI marketplace can confidentially match a business to hundreds of qualified investors — PE firms, family offices, strategic acquirers — based on specific criteria, without the business owner’s name or identity being disclosed until they choose to engage.
Daniel Bae, Founder and CEO of Amafi and a banker with over $30 billion in transaction experience: “AI-powered M&A doesn’t mean getting rid of advisors — it means the advisor spends more time on strategy, negotiation, and relationships, and the platform does the work that used to cost the seller weeks of advisor time. The seller gets more process for less upfront cost.”
The Amafi Model: How It Works for Sellers
Amafi is a confidential, AI-driven M&A matching marketplace. Here is what it costs to sell through the platform:
| Fee type | Amount |
|---|---|
| Joining the marketplace | Free |
| AI buyer matching | Free |
| AI financial model, CIM, teaser | Free |
| AI-native data room | Free |
| Success fee (at close) | Agreed with your licensed advisor |
| Monthly retainer | None |
| Listing fee | None |
When a match is confirmed and you choose to proceed, a licensed advisor — Lyndon Advisory (in-house) or a partner — executes the transaction. The success fee is negotiated between you and the advisor at that point; it is competitive with boutique advisory rates because the AI platform has already done much of the origination, document preparation, and buyer matching work.
You keep more of the proceeds because the platform does more of the work.
How to Estimate Your Total Sale Cost
For a rough estimate of total advisory and transaction cost:
- Determine your expected enterprise value (EV) — the headline price a buyer pays for your business, which includes any debt assumed.
- Apply the Lehman formula to calculate a benchmark advisory fee, or ask an advisor for their actual rate.
- Add legal fees — budget $50,000–$150,000 for a standard mid-market process, more for cross-border or complex deals.
- Add accounting costs — budget $20,000–$50,000 for QoE and diligence preparation.
- Compare retainer vs. success-only models — if a process takes 9 months, a $15,000/month retainer adds $135,000 in committed costs before close.
For a $30 million business sale: a traditional advisor might charge a $1.1 million success fee (modern Lehman) plus $135,000 in retainers plus $100,000 in legal fees = $1.335 million total before accounting costs. A success-only marketplace model would charge the success fee only — and only if the deal closes.
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