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Business broker fees: what sellers pay and how the Lehman scale works

By , founder, author of the open-source hyperresearch CLIPublished Updated

A Main Street business broker usually charges the seller a success fee of 8% to 12% of the sale price, paid at closing, according to the International Business Brokers Association (IBBA, 2021). On deals above about $2 million, M&A advisors more often use the Lehman scale (5%, 4%, 3%, 2%, 1% per million) or Double Lehman (10%, 8%, 6%, 4%, 2%). On a $5 million sale, Double Lehman comes to $300,000, or 6.0%. In Axial’s 2026 fee survey of 331 advisors, 71% also charged some upfront fee. The minimum fee, the tail period and the definition of “purchase price” can move what you pay more than the headline rate does.

Typical business broker commission by deal size

Percentages fall as deals get bigger. No free 2026 survey publishes success fees by deal size: the IBBA and M&A Source Market Pulse highlights report multiples and timelines but not fees, and Axial’s 2026 guide says only that average fees “increased modestly across most deal sizes.” The ranges below are the best published ones, and most are older than two years.

Deal size Typical success fee Source Date
Main Street (IBBA: under about $2 million) 8% to 12% IBBA whitepaper June 2021, older than 24 months
Main Street 8% to 15%, “may be subject to an agreed minimum” IBBA Guide to the Business Brokerage Profession 2021, older than 24 months
Under $1 million 8% M&A Source rule of thumb 2018, older than 24 months
$1 million to $5 million 6% to 8% Same 2018
$5 million to $10 million 4% to 6% Same 2018
About $10 million Just over 4% on average Axial, from its 2023-24 fee guide Data older than 24 months
$10 million to $25 million 4% to 5% M&A Source 2018
About $20 million About 3% on average Axial, 2023-24 fee guide Data older than 24 months
$25 million to $50 million 2.5% to 4% M&A Source 2018

How the fee is structured matters as much as the rate. In Axial’s latest survey, 43% of advisors used a Lehman formula (including Double Lehman), 36% a flat percentage (up from 26% the year before), 13% an accelerator that raises the percentage above a price threshold, and 8% a hybrid. The IBBA guide notes that brokers on larger deals often use “a modification of a Lehman formula.”

Lehman and Double Lehman formula, worked out

The Lehman scale charges 5% of the first $1 million, 4% of the second, 3% of the third, 2% of the fourth and 1% of everything above $4 million. Double Lehman doubles each step: 10%, 8%, 6%, 4%, 2% (M&A Source). The same definition appears in a consulting agreement filed with the SEC in October 2026, which writes Double Lehman as “Lehman (2.0)” (SEC exhibit).

Worked example, a $2.5 million sale on Double Lehman:

  • 10% of the first $1,000,000 = $100,000
  • 8% of the second $1,000,000 = $80,000
  • 6% of the remaining $500,000 = $30,000
  • Total fee: $210,000, an effective rate of 8.4%

The table runs the same arithmetic at four prices. It is calculation, not survey data.

Sale price Lehman fee Double Lehman fee Flat 10%
$1,000,000 $50,000 (5.0%) $100,000 (10.0%) $100,000
$2,500,000 $105,000 (4.2%) $210,000 (8.4%) $250,000
$5,000,000 $150,000 (3.0%) $300,000 (6.0%) $500,000
$10,000,000 $200,000 (2.0%) $400,000 (4.0%) $1,000,000

On a $3 million sale, a flat 10% is $300,000, Double Lehman $240,000 and Lehman $120,000. Compare dollars at your realistic price, not headline percentages.

Minimum fees

Most engagement letters set a floor. The IBBA guide says Main Street commissions “may be subject to an agreed minimum.” Website Closers, a brokerage, puts common minimums at $10,000 to $25,000 (June 2026); that is one firm’s statement, not survey data. Axial says minimum fee requirements are standard in the middle market and protect the advisor if the owner accepts an offer well below the price discussed at signing.

A minimum binds below the price at which the percentage equals it. With a 10% rate and a $25,000 minimum, that price is $250,000:

  • $150,000 sale: 10% would be $15,000, so the $25,000 minimum applies, an effective rate of 16.7%.
  • $350,000 sale, the median small-business sale price on BizBuySell in Q3 2026 (BizBuySell Insight Report): 10% is $35,000, so the minimum does not bind.

Small deals are where minimums bite. Market Pulse put the average multiple for deals under $500,000 at 2.0x seller’s discretionary earnings in Q2 2026 (highlights PDF), so a business earning $75,000 a year sells for about $150,000. For how those multiples are built, see small business valuation multiples by industry.

Retainers and upfront fees

Upfront fees are common, and less common than they were. In Axial’s 2026 survey, 31% of advisors charged a one-time fixed retainer, 29% a monthly retainer, 7% milestone fees and 2% hourly. The share charging nothing until closing rose to 29%, from 19% in the prior survey. Advisors who reviewed the guide cite 77% crediting the engagement fee against the success fee. Axial’s earlier guide (2023-24 data) put most fixed retainers between $5,000 and $50,000 and most monthly retainers at $5,000 to $10,000.

On Main Street, the IBBA guide describes an upfront fee for a Broker Opinion of Value, usually applied against the closing commission. At the top end, the investment bank Lincoln International says in its 2026 SEC registration that “a small number” of its engagements carry a non-refundable retainer (Lincoln S-1/A).

Red flags:

  • A retainer large relative to the success fee. The M&A Source article (2018) says the upfront fee should not exceed 15% of the total fee and warns that some firms take a large upfront fee, then make little effort to close.
  • No credit against the success fee. Ask for the retainer to be deducted at closing, and refunded or credited if the advisor ends the engagement.
  • A fee paid before you have a written contract and disclosures. In Illinois, a business broker must register with the Secretary of State, hand you a written disclosure document before you sign or pay, and you then have 7 days to rescind and get “a refund of all payments” (815 ILCS 307/10-30).

Exclusivity and the tail period

Exclusivity clauses typically stop you hiring another advisor during the term (SPZ Legal, 2025). Set the term against how long sales take. Market Pulse reported 6 to 10 months from engagement to close on Main Street and 11 to 12 months in the lower middle market in Q2 2026 (IBBA release). Pepperdine’s 2026 broker survey put the median time from listing to close at 7.5 months for deals under $499,000 and 9.5 months above $5 million (Pepperdine). A six-month exclusive is shorter than a typical sale.

The tail keeps the fee alive after the engagement ends. Divestopedia defines it as usually 12 to 24 months (definition, updated March 2024, older than 24 months). Lincoln’s filing calls tails “customary” even though its engagements are terminable on notice. Two limits are worth asking for: the tail covers only buyers the advisor introduced during the engagement, and only deals that close inside the tail (SPZ Legal). Ask for the named buyer list in writing when the engagement ends.

M&A advisor vs business broker

The line is deal size. Market Pulse splits the market at $2 million: Main Street below, lower middle market from $2 million to $50 million.

Main Street broker M&A advisor (lower middle market)
Purchase price Under $2 million $2 million to $50 million
Earnings basis Seller’s discretionary earnings (SDE) EBITDA
Average multiple, Q2 2026 2.0x to 3.1x SDE 4.0x to 5.8x EBITDA
Engagement to close, Q2 2026 6 to 10 months 11 to 12 months
Average offers per deal, 2025 2.38 3.61
Typical fee Flat 8% to 12%, with a minimum Lehman, Double Lehman or flat, often with a retainer
Usual deal form Asset sale More often a stock sale

Sources: multiples from the Q2 2026 highlights; timelines from the Q2 2026 release; offers from the Q4 2025 highlights; fees and deal form from the IBBA guide.

The deal form changes the licensing. The IBBA guide notes that brokering a stock sale is a securities transaction under federal law. Since March 29, 2023, federal law has exempted M&A brokers from SEC broker-dealer registration when they sell a privately held company with less than $25 million of EBITDA or less than $250 million of revenue in the prior fiscal year to a buyer who will control it and take part in running it. The exemption is lost if the broker holds the deal funds, finances the deal, binds a party, or represents both sides without written disclosure and both parties’ written consent (15 U.S.C. 78o(b)(13)).

Who pays the business broker

The seller, out of the sale proceeds, in most deals. The IBBA’s own Q&A says “most Business Brokers or intermediaries work for the seller and are paid by the seller” (IBBA). A buyer pays only an advisor the buyer hires.

Buyers should still price it in: a seller paying $35,000 on a $350,000 sale nets $315,000 before other costs, and that net is what the seller negotiates toward. If the seller’s broker also refers you to an SBA 7(a) lender and is paid for the referral, that fee goes on SBA Form 159, signed by you, the agent and the lender, and a referral agent may be paid by the applicant or the lender, not both (SBA SOP 50 10 8.1, effective October 1, 2026). For the price itself, see how to value a small business; for checking the market before you sign, see commercial due diligence for a small acquisition.

Business broker licensing by state

Most states have no business-broker license, but many treat a business sale as real estate brokerage. Florida’s statute defines a broker as anyone who, for pay, negotiates the sale of “business enterprises or business opportunities” (Fla. Stat. 475.01, 2026). California’s real estate broker definition covers anyone who sells “real property or a business opportunity” for compensation (Cal. Bus. & Prof. Code 10131). Illinois has its own Business Brokers Act, with registration, a disclosure document and the 7-day rescission right above (815 ILCS 307/10-10). The IBBA guide counts about 17 states that require a real estate license when a lease or real property transfers with the business, and names Nevada and Illinois as requiring a business-broker license or permit; that count is from 2021, so check your state’s regulator.

What to negotiate in a broker agreement

Axial’s 2026 survey asked advisors what drives the success fee they propose. Closing risk and engagement size were “very important” to 66% each and deal complexity to 58%; competition from other advisors was very important to only 9%. Clean books lower the fee more than a bake-off does. The points worth writing into the agreement:

  • The fee base. Say whether the percentage covers earnouts, seller notes, inventory, working capital and real estate, and that fees on deferred amounts are paid when the cash arrives.
  • The structure. Price the quote under flat, Lehman and Double Lehman at your realistic price.
  • The minimum. Tie it to the price range agreed at signing.
  • The retainer. Small, and credited at closing.
  • The tail. 12 months or less, limited to named buyers the advisor introduced and to deals that close inside it.
  • Excluded buyers. List buyers who have already approached you. Axial notes some advisors take a lower fee if the sale closes with an unsolicited buyer.
  • Expenses. A cap, with approval required above it.
  • Term and exit. Long enough for a 6 to 12 month sale, with a written termination right.
  • Dual representation. Disclosed and consented to in writing.

Pricing a sale before you sign

Hyperresearch can build the market side of that decision as a cited report: closed-deal multiples for your industry and size band, recent sales nearby, and the licensing rules in your state, with every citation checked against the source it cites. The HVAC acquisition sample shows one for a $2 million-revenue company. It reads public sources only, so the engagement letter, the seller’s books and the broker’s buyer list stay with you and your advisers.

Sources

All pages were read on 2026-11-01.