Navigating Business Broker Fees for a Smooth Sale

jitender kumar
May 26
3 min read

Ready to sell your business? A business broker can help you attract buyers and close the deal, but their fees can be a surprise if you’re not prepared. This guide explains business broker fees, how they’re structured, and whether they’re worth it, so you can confidently plan the sale of your business.

What Are Business Broker Fees?

Business broker fees cover services like valuing your business, marketing it, negotiating with buyers, and managing the transaction. These fees pay for the broker’s expertise and effort to ensure a successful sale.

Are Business Brokers Paid a Commission?

Yes, most brokers earn a commission, typically 8-12% of the sale price. For example, a $1 million sale at 10% results in a $100,000 fee. This structure motivates brokers to maximize your sale price.

How Are Fees Structured?

Fees vary by broker and deal. Common structures include:

1. Commission-Based Fees

Commissions of 8-12% are standard, encouraging brokers to secure the best deal.

2. The Lehman Scale

For larger sales or M&A, brokers use the Lehman Scale:

10% on the first $1 million
8% on the second $1 million
6% on the third $1 million
4% on amounts above $3 million

Example: A $4 million sale:

10% of $1M = $100,000
8% of $1M = $80,000
6% of $1M = $60,000
4% of $1M = $40,000
Total fee: $280,000

3. Flat Fees

Some brokers charge a flat fee ($5,000-$15,000) for specific services, suitable for high-value businesses.

4. Hybrid Fees

A lower commission (5-7%) plus an upfront retainer ($1,000-$5,000) balances costs.

5. The Difference Between Upfront Fees vs. Post-Sale Fees from Business Brokers

Upfront Fees: Paid upfront for valuation or marketing, typically $1,000-$5,000.
Post-Sale Fees: Commissions or success fees paid after the sale, based on the sale price.

6. What Are Success Fees and Monthly Retainers?

Success Fees: Paid only upon closing, typically 8-12% or a minimum commission ($10,000-$25,000).
Monthly Retainers: Fees ($1,000-$5,000/month) for ongoing services, often credited toward the success fee.

The Size of Your Business Matters

Small Businesses (under $1 million): Higher rates (10-12%) or minimum fees.
Mid-Sized Businesses ($1 million to $5 million): 8-10% rates.
Large Businesses (over $5 million): 5-8% via tiered structures.

Sale Price	Commission Rate	Estimated Fee
$500,000	10-12%	$50,000-$60,000
$1,000,000	8-10%	$80,000-$100,000
$5,000,000	5-8%	$250,000-$400,000

What Affects Fees?

Business Size: Smaller deals have higher rates.
Complexity: Niche businesses may cost more.
Broker Expertise: Experienced brokers charge higher fees.
Market Conditions: Fees vary with market demand.
Services: Full-service brokers cost more.

Additional Costs

Valuation Fees: $1,000-$5,000.
Marketing Costs: $500-$2,000.
Legal/Accounting Fees: $2,000-$10,000.

Who Pays the Broker?

The business seller generally pays, but fees can be negotiated.

Are Fees Worth It?

Brokers can increase your sale price, save time, and ensure confidentiality. For complex deals, their expertise is invaluable. For simple sales, consider DIY or flat-fee options.

Tips for Choosing a Broker

Compare multiple brokers.
Negotiate fees.
Review contracts for hidden costs.
Check for CBI or IBBA credentials.
Confirm marketing plans.

Final Thoughts

Business broker fees, typically 8-12%, depend on business size and deal complexity. Understanding fee structures helps you budget and choose the right broker. A skilled broker can make the selling process smoother and more profitable.