How Much Do Business Brokers Charge? A Friendly Guide to Selling Your Business

Selling your business is a big decision, and hiring a business broker can simplify the process, connect you with potential buyers, and help maximize your sale price. But one question looms large: How much will a business broker cost? This guide breaks down business broker fees, commission structures, and key factors to consider, so you can confidently navigate the sale of your business.

What Are Business Broker Fees?

Business broker fees are the costs you pay for professional services when selling a business. These services include valuing your business, marketing it to buyers, negotiating deals, and guiding you through closing the sale. Brokers use their expertise, networks, and time to ensure a successful transaction, and their fees reflect this value.

Are Business Brokers Paid a Commission?

Yes, most business brokers are paid a commission based on a percentage of the final sale price, typically ranging from 8-12%, with 10% being the industry standard. For example, if your business is sold for $1 million at a 10% commission rate, the broker fee for selling would be $100,000. This commission structure incentivizes brokers to secure the highest possible selling price, aligning their goals with yours.

How Are Business Broker Fees Structured?

Business broker commissions and fees vary depending on the broker, the size of your business, and the complexity of the sale. Here’s a look at the common fee structures:

1. Commission-Based Fees

The most common structure, commissions are a percentage of the final sale price, typically 8-12%. This motivates the broker to maximize your sale price, as their fee grows with the deal’s value.

2. The Lehman Scale (or Double Lehman)

For larger deals, especially in mergers and acquisitions (M&A), brokers may use the Lehman Scale or Double Lehman, a tiered commission structure:

• 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: For 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

This makes fees more affordable for high-value transactions.

3. Flat Fees

Some brokers charge a flat fee (e.g., $5,000-$15,000) for specific services like valuation or marketing. This is less common but appealing for high-value businesses where a percentage-based fee might seem excessive.

4. Hybrid Fees

A hybrid model combines a lower commission (e.g., 5-7%) with an upfront retainer or flat fee (e.g., $1,000-$5,000). This ensures the broker is paid for their time while keeping costs manageable.

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

• Upfront Fees: These are paid before the sale, often covering initial work like business valuation or marketing setup. Typically $1,000-$5,000, these fees may be non-refundable and ensure the broker’s early efforts are covered.

• Post-Sale Fees: These include the commission or success fee, paid only after the business is sold. Calculated as a percentage of the sale price, these fees form the bulk of the broker’s compensation and are tied to a successful sale.

6. What Are Success Fees and Monthly Retainers?

• Success Fees: A success fee is the commission paid only if the sale closes, typically 8-12% of the sale price or a minimum success fee (e.g., $10,000-$25,000) for smaller deals. This aligns the broker’s motivation to sell with your goals.

• Monthly Retainers: Some brokers charge a monthly fee (e.g., $1,000-$5,000) for ongoing services like marketing or buyer outreach. These are less common and may be deducted from the final success fee.

The Size of Your Business Matters

The size of your business directly impacts the fee structure:

• Small Businesses (under $1 million): Expect higher commission rates (10-12%) due to the effort required, often with minimum success fees to ensure the broker’s work is compensated.

• Mid-Sized Businesses ($1 million to $5 million): Commissions typically range from 8-10%, as the higher sale price offsets the broker’s effort.

• Large Businesses (over $5 million): Tiered structures like the Lehman Scale reduce the percentage to 5-8%, making fees more cost-effective.

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 Influences Business Broker Fees?

Several factors determine how much a broker charges:

• Business Size and Value: Larger businesses often have lower percentage rates, while small businesses may face higher rates or minimum fees.

• Complexity of the Sale: Niche industries or complex financials require more effort, potentially increasing fees.

• Broker Expertise: Experienced business brokers or M&A advisors may charge higher fees for their specialized services.

• Market Conditions: In a seller’s market, brokers may lower fees to attract clients. Tougher markets may lead to higher fees due to increased effort.

• Scope of Services: Comprehensive services, like valuation, marketing, and legal support, come with higher fees than basic listing services.

Additional Costs to Watch For

Beyond commissions, consider:

• Valuation Fees: $1,000-$5,000 for a professional valuation, often separate from the success fee.

• Marketing Costs: $500-$2,000 for advertising or listing on platforms like BizBuySell.

• Legal and Accounting Fees: $2,000-$10,000 for professionals to finalize the sale, not included in the broker’s fees.

Who Pays the Business Broker?

The business seller generally pays the broker’s fees, as the broker represents the seller. In some cases, fees may be split or negotiated with the buyer, depending on the deal. An honest conversation with your broker can clarify this.

Are Business Broker Fees Worth It?

A skilled broker can save time, reduce stress, and boost your sale price. Benefits include:

• Maximizing Value: Brokers use market insights to get the best price.

• Time Savings: They handle marketing, buyer screening, and paperwork.

• Confidentiality: Brokers protect sensitive information during the sale process.

• Access to Buyers: Their networks connect you with qualified buyers.

• Expert Guidance: Brokers navigate complex steps, reducing risks.

For example, a 10% commission on a $1 million sale is $100,000, but if the broker increases the price by $150,000, you net a profit. For small businesses or simple sales, a DIY approach or flat-fee services may be more cost-effective.

Tips for Getting the Best Value

1. Compare Brokers: Get quotes from at least three brokers or M&A firms, reviewing their track records.

2. Negotiate Fees: Fees aren’t set in stone; some brokers may lower commissions or waive upfront fees.

3. Review Contracts: Check for hidden fees and clarify services included.

4. Check Credentials: Look for Certified Business Intermediary (CBI) or IBBA affiliations.

5. Ask About Marketing: Ensure the broker has a solid plan to market the business.

Alternatives to Traditional Brokers

• DIY Sale: List on platforms like BizBuySell for $100-$300, but this requires time and expertise.

• Flat-Fee Services: Some brokers offer valuation or marketing for $5,000-$15,000.

• M&A Advisors: For niche businesses, M&A firms charge higher fees but provide specialized expertise.