M&A advisory fees are rarely straightforward. They vary widely depending on deal size, complexity, and structure—making it difficult to benchmark what’s fair. For both buyers and sellers, understanding typical M&A fees by deal size is essential for setting expectations, negotiating better terms, and avoiding costly surprises.
This guide provides a detailed breakdown of how advisory, legal, and due diligence costs scale across transaction tiers, offering benchmarks and insights for 2025.
| Deal size | Typical M&A fees | Representative fees |
|---|---|---|
| 1 < $10 million | Lehman-style: 10% (first $2 million), down to ~5% (above $5 million) | $7 million deal → ~$490,000 fee |
| 2 $10–$25 million | 3–6% (tiered) | $20 million deal → $600,000–$1.2 million fee |
| 3 $25–$100 million | 3–5% (declines with deal size) | $60 million deal → $2.4 million at 4%, or flat $2 million minimum fee |
| 4 $100–$500 million | 1–2% | $250 million deal → $2.5–$5 million fee |
| 5 $500 million+ | 1–2% (customized for size/structure) | $1 billion deal → $10–$20 million fee depending on the structure |
- Lehman-style: 10% on first $2 million = $200,000, 7% on next $2 million = $140,000, 5% on remaining $3 million = $150,000 → Total: ~$490,000, retainer credited.
- Tiered fee of 3–6% on $20 million = $600,000–$1.2 million, depending on advisor structure and any accelerator terms.
- Four percent of $60 million = $2.4 million. Some advisors prefer a flat fee (e.g. $2 million minimum) instead of percentage tiers.
- Standard 1–2% on $250 million = $2.5–$5 million, depending on complexity and competitive pressure.
- Larger deals are fully negotiated. For $1 billion, a 1–2% fee yields $10–$20 million, sometimes adjusted for stock, earnouts, or pay-on-fail clauses
What are M&A fees?
M&A fees are professional charges paid to investment banks or M&A advisory firms for managing the purchase or sale of a company. These fees compensate advisors for a wide range of services, from preparing financial materials and marketing the deal to negotiating terms, supporting due diligence, and closing the transaction.While many parties contribute to a deal (e.g., legal counsel, accountants, consultants), the term “M&A fees” typically refers to what’s paid to the lead mergers and acquisitions advisory firm. These fees are not a single line item but a negotiated structure that typically includes:
- Retainer fees
Paid upfront or monthly to cover preparation, outreach, and deal management. Often credited against the success fee
- Success fees
Paid upon closing, usually calculated as a percentage of transaction value. This makes up the bulk of advisory compensation
- Tiered or flat structures
Many advisors use declining fee percentages (Lehman or double Lehman formula). Others prefer flat rates or fixed success fees
- Minimums and accelerators
Minimum success fees protect advisory economics. Accelerators reward advisors if the sale price exceeds a set benchmark.
Fee structures are designed to balance effort, risk, and incentive, ranging from a few thousand dollars to dozens of millions. Smaller deals often carry higher percentage fees to ensure fair compensation for the advisor’s time. Bigger, more competitive deals may involve capped or fixed fees, especially when large firms are involved.
Ultimately, what matters most is how fees are structured: what’s included, when they’re triggered, how retainers are treated, and whether non-cash consideration (like stock or earnouts) affects the calculation.
Factors influencing M&A fees
Advisors adjust pricing based on risk, complexity, and deal mechanics. Common drivers include:
- Deal size
Larger companies usually carry lower percentage fees, but because the transaction value is higher, the advisor still earns significant compensation. Smaller deals often require just as much preparation, which can make fees feel disproportionately high. This is why minimum fees and tiered structures are standard in smaller transactions.
- Deal complexity
Cross-border deals, regulatory hurdles, union contracts, intellectual property, cybersecurity risks, and complicated tax structures all increase advisory workload. Transactions involving distressed assets or carve-outs often add restructuring advisory fees on top of standard success fees.
- Likelihood of closing
If the buyer has not secured financing, the seller is indecisive, or there are few credible buyers, the risk of failure rises. Advisors typically respond by charging higher retainers, larger minimums, or structuring upfront fees to protect themselves against failed deals.
- Process structure
Investment banking fees depend heavily on how the deal is marketed. Competitive auctions with multiple bidders and tight deadlines require more resources and may include performance-based bonuses. By contrast, simpler one-on-one negotiations usually cost less.
- Deal structure and form of payment
When potential acquisitions involve earnouts, stock, or seller financing, defining the “purchase price” and timing of fees becomes more complex. Advisors usually establish clear rules—or add supplemental fees—for handling non-cash or deferred payments.
- Level of preparation
Clean financials, well-organized data rooms, and responsive management teams streamline deals and reduce advisory costs. Poor preparation slows progress, increases advisory time, and drives up overall M&A deal expenses.
- Timeline and urgency
Tight deadlines, end-of-quarter pressures, or transactions pushed through over holiday periods demand more senior-level involvement and off-hours work. Financial advisor costs frequently reflect that additional intensity.
- Market environment
When debt financing is limited or valuation gaps are wide, deals tend to stall and acquisition expenses rise. More transactions collapse under these conditions. To mitigate uncertainty, investment bankers often increase reliance on retainers, set firm minimums, and include milestone-based payments to protect against mergers and acquisitions risks.
- Reputation and team structure
Bulge-bracket fees—charged by the largest global investment banks—are generally higher. These firms deploy senior partners and manage high-stakes, complex transactions, which justifies their pricing. Smaller boutique investment banks or junior-led teams often charge less, reflecting different resource levels.
- Competition among advisors
When multiple firms pitch for the same mandate, they may offer more favorable terms—crediting retainers, lowering expense caps, or adjusting fee mechanics to secure the engagement.
- Legal, diligence, and third-party costs
Although not included in the advisor’s fee, these expenses impact the overall budget and can influence how advisory agreements are drafted. Third-party expenses—such as fairness opinion costs—should be clearly scoped in the engagement letter, as they often fall outside reimbursable thresholds.
- Advisory fee structure
Whether based on flat percentage success fees, tiered models (e.g., the Lehman formula), minimums, or accelerators, the structure significantly affects total compensation. This also includes decisions about when M&A transaction advisory fees are triggered and how break fees or contingent payments are applied.
Explore the tax implications of mergers and acquisitions to understand how structure impacts after-tax proceeds and fee timing.
Typical M&A fees by deal size
Fees tend to decrease as deals get larger, but the structure (grids, minimums, retainers, accelerators) matters as much as the headline percentage. Below is a size-by-size view with fee benchmarks.
<$10 million (micro/small deals)
For businesses valued under $10 million, advisors typically apply a tiered fee structure that combines a minimum success fee with a modest monthly retainer. For example, a 2025 engagement letter from Axial set out a $150,000 minimum fee, a small upfront payment, and a monthly retainer credited against the final success fee. The success fee followed a Lehman-style grid—10% on the first $2 million, stepping down to roughly 5% for amounts above $5 million.
$10–$25 million (lower middle market)
In this range, mid-single-digit success fees are common, usually structured through Lehman-style tiers. Recent industry reporting shows that 3–6% is a reasonable benchmark for business owners in the lower middle market, often tied to EBITDA levels where fees decline as deal size increases.
Retainers are frequently credited against the success fee. Some advisors also add bonus percentages if the final price exceeds a set threshold. In 2024, an Axial survey found that roughly 20% of advisory firms included accelerators for strong outcomes in their fee structures.
$25–$100 million (core middle market)
For mid-sized businesses, average M&A fees generally fall within the low-to-mid single digits. A 2025 industry review found that many mid-market M&A deals in the $10–30 million EBITDA range landed within the 3–5% success fee zone, with fees decreasing toward the higher end of that range. While Lehman-style tiers remain widely used, some advisors prefer flat percentages with higher minimums to keep total compensation predictable and aligned with deal complexity.
>$100 million (large deals)
For deals above $100 million—including both upper middle-market and large-cap transactions—sell-side M&A fees typically range from 1–2%. For complex mergers and acquisitions, sell-side advisory teams often customize fee mechanics to address added challenges, such as regulatory hurdles.
Larger transactions frequently involve additional complexities, including cross-border issues, regulatory risk, and non-cash considerations such as stock, earnouts, or contingent value rights (CVRs). These elements make it harder to define the “total deal value” and determine when M&A broker fees are triggered.
Other expenses: Due diligence costs and M&A legal fees by deal size
Companies should budget separately for legal and due diligence expenses, as these are contracted independently from investment banking or advisory arrangements. Most transactions require engaging acquisition lawyers, accounting firms, ESG specialists, or cybersecurity consultants—each with their own fee structures in addition to advisory costs.
Legal fees in M&A typically increase when transactions involve regulatory hurdles or complex structures. Acquisition lawyer fees also rise when multiple firms are engaged, which is common in cross-border or heavily regulated deals. These layers of complexity add time and increase transaction costs.
Due diligence costs escalate as well when deals require deeper analysis. Modern business acquisition analysis extends far beyond financial and tax reviews. Today, it often includes cybersecurity assessments, ESG evaluations, and HR diligence alongside financial workstreams. These specialized reviews require expert input, lengthen timelines, and drive up total deal closing costs.
Because legal and due diligence services are tailored to the specifics of each transaction—deal size, industry, jurisdiction, and buyer expectations—their total costs are difficult to benchmark precisely. Companies should treat them as essential but variable components of the overall deal budget.
Negotiating M&A advisory fees
Although firms often propose standard fee structures, there is usually room to negotiate terms—particularly in competitive or well-prepared deals. Below are four effective ways to secure more favorable terms with business brokers and advisors:
Define the success fee clearly
Ambiguity in what counts as “total transaction value” can lead to disputes. If your deal includes earnouts, seller notes, rolled equity, or stock, require the advisor to specify what’s included in the success fee calculation and when that fee becomes due. Some fees trigger at signing, others at closing, and some only after funds are transferred. Clarify this upfront.
Credit the retainer against the success fee
If you are paying a retainer, negotiate to have that amount deducted from the final payment at closing. This reduces your overall outlay and ensures you are not paying twice for the same work. More importantly, it keeps the advisor’s incentives aligned with your outcome, rewarding progress without overpaying for process management.
Cap reimbursable expenses
Reimbursable items such as travel, meals, lodging, and third-party consultants can add up quickly. Request a cap on expenses or require written approval for amounts above a set threshold. This prevents surprise charges and enforces financial discipline throughout the process.
Current trends in M&A fees
Recent shifts are reshaping both the structure and dynamics of M&A advisory fees:
AI automation trims advisory effort
As acquirers adopt AI tools, advisors face increased pressure to justify their fees. While only 21% of M &A practitioners currently use generative AI, adoption rises to 36% among the most active acquirers—who already outperform less frequent dealmakers.
Buyers are becoming more self-sufficient by automating diligence, benchmarking, and integration planning, while leveraging secure digital data rooms. As they assume more control of the process and see greater potential to reduce merger costs, they demand leaner, more flexible fee structures from advisors who once dominated these workflows.
Breakup-fee sharing and announcement fees rise amid regulatory risk
Leading investment banks such as Goldman Sachs and JPMorgan are adjusting their fee models in response to the growing number of deals blocked by regulators. Buy-side advisory teams are now negotiating up to 25% of the breakup fee—up from historical averages of ~15%—and charging announcement fees of 20–25% of total advisory fees, even if a deal does not close. These adjustments reflect the need to protect fee income in a more uncertain regulatory environment.
Key takeaways
- Success fees decline as deal size grows, ranging from ~10% for micro-deals to 1–2% for transactions above $100 million.
- Retainers are almost always credited against success fees, with minimums in place to protect advisor economics, especially for smaller deals.
- Accelerators and breakup-fee sharing are increasingly common, aligning incentives and mitigating regulatory risks.
- Fee structures matter more than headline percentages. Timing, deal mechanics, and non-cash components often determine the true cost of consulting fees in M&A.
