Selling a business is one of the most significant financial decisions you’ll make as an entrepreneur. Whether you’re retiring, moving on to a new venture, or simply cashing out, the process can be complex, time-consuming, and emotionally taxing. That’s why many business owners turn to business brokers or M&A advisors to guide them through the sale.
But how much do brokers charge to sell a business? The answer isn’t straightforward. Broker fees vary widely depending on the size of your business, the industry you’re in, and the services provided. In this comprehensive guide, we’ll break down everything you need to know about business broker fees in 2025, including pricing models, hidden costs, and tips to maximize your ROI.
What Do Business Brokers Do?
Business brokers are professionals who specialize in buying and selling businesses. They act as intermediaries between buyers and sellers, handling everything from business valuations and marketing to negotiations and closing the deal. Their expertise can be invaluable, especially if you’re unfamiliar with the intricacies of selling a business.
Key services provided by brokers include:
- Business Valuation: Determining the fair market value of your business.
- Marketing: Creating confidential listings and advertising your business to potential buyers.
- Negotiations: Helping you secure the best possible price and terms.
- Due Diligence: Assisting with paperwork, legal requirements, and financial disclosures.
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How Do Business Brokers Charge?
Business brokers typically charge fees in one of two ways:
1. Success Fees (Commissions)
A success fee is a percentage of the final sale price, paid only when the deal closes. This is the most common pricing model and aligns the broker’s incentives with yours—they only get paid if you do.
- Average Commission Rates:
- Main Street Businesses (Under $1M Revenue): 8%–12%
- Lower Middle Market (
- 1M–
- 1M–50M Revenue): 5%–10%
- Middle Market ($25M+ Revenue): 1%–4%
2. Retainers and Upfront Fees
Some brokers charge retainers or upfront fees to cover initial costs like marketing, valuations, and administrative expenses. These fees can range from
5,000to
5,000to100,000+, depending on the size and complexity of the deal.
- Pro Tip: Many brokers credit retainers against the final commission, so you’re not paying double.
Business Broker Fees by Business Size
The size of your business plays a significant role in determining broker fees. Here’s a breakdown:
1. Main Street Businesses (Under $1M Revenue)
These are small businesses, such as local retail shops, restaurants, or service providers.
- Typical Commission: 8%–12% of the sale price.
- Minimum Fees:
- 10,000–
- 10,000–15,000 (to ensure the broker’s time is compensated).
- Retainers: Rarely charged.
Example: If your business sells for
500,000,youmightpaya10
500,000,youmightpaya1050,000).
2. Lower Middle Market (1M–50M Revenue)
These businesses are often sold by experienced brokers or boutique M&A firms.
- Typical Commission: 5%–10%, often calculated using the Double Lehman Formula:
- 10% of the first $1M
- 8% of the second $1M
- 6% of the third $1M
- 4% of the fourth $1M
- 2% of everything above $4M
Example: For a
10Msale,thecommissionwouldbe
10Msale,thecommissionwouldbe400,000.
3. Middle Market ($25M+ Revenue)
Large businesses in this category are typically handled by M&A firms or investment banks.
- Typical Commission: 1%–4% of the sale price.
- Retainers: Common, ranging from
- 5,000to
- 5,000to50,000+ per month.
Common Pricing Models: Lehman Formula vs. Flat Fees
1. Lehman Formula
The Lehman Formula is a sliding scale that reduces the commission percentage as the sale price increases. It’s widely used in the lower middle market.
- Pros: Fair for smaller deals.
- Cons: Incentives may misalign for larger deals, as the broker earns less as the sale price grows.
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2. Flat Fees
Some brokers charge a flat percentage (e.g., 5%) regardless of the sale price.
- Pros: Simpler and more predictable.
- Cons: May be less cost-effective for smaller deals.
Hidden Costs of Selling a Business
Beyond broker fees, sellers should budget for:
- Legal Fees:
- 5,000–
- 5,000–20,000+
- Accounting Fees:
- 2,000–
- 2,000–10,000+
- Marketing Costs:
- 1,000–
- 1,000–10,000+
- Due Diligence Expenses: Varies widely
Should You Pay Upfront Fees? Pros and Cons
Pros of Upfront Fees:
- Covers initial costs like valuations and marketing.
- Signals commitment to the broker.
Cons of Upfront Fees:
- Risk of poor service if the broker is already paid.
- Can be expensive, especially for small businesses.
Tip: Look for brokers who credit retainers against the final commission.
How to Negotiate Broker Fees
- Shop Around: Compare multiple brokers to understand market rates.
- Ask for Flexibility: Some brokers may lower their commission for high-value deals.
- Discuss Retainers: Negotiate to have upfront fees credited against the final commission.
- Check References: Ensure the broker has a proven track record in your industry.
FAQs About Business Broker Fees
1. Who Pays the Broker Fee?
In most cases, the seller pays the broker’s commission.
2. Are Broker Fees Tax Deductible?
No, broker fees are considered transaction costs and are not tax-deductible under the Tax Cuts and Jobs Act of 2017.
3. Can I Sell My Business Without a Broker?
Yes, but it’s challenging. Brokers bring expertise, networks, and negotiation skills that can significantly increase your sale price.
Conclusion: Is Hiring a Broker Worth It?
Hiring a business broker can be a smart investment, especially if you’re unfamiliar with the selling process or lack the time to manage it yourself. While broker fees can seem high, the right broker can help you secure a higher sale price and navigate complex negotiations.
In 2025, as the market evolves, brokers are offering more flexible pricing models and value-added services. Whether you choose a traditional broker or a modern platform like Baton (which charges just 6% commission), the key is to find a partner who aligns with your goals and budget.
Ready to sell your business? Start by getting a free business valuation and exploring your options. With the right broker by your side, you can maximize your ROI and ensure a smooth, successful sale.
