How Much do Brokers Charge to Sell a Business: is it Worth it?

Selling your business is one of the most important financial decisions you’ll make. While many owners turn to business brokers for support, before hiring a broker, it is important to understand how brokers work, and how much brokers charge to sell a business. (For a broader look at whether using a broker is right for you, check out our guide to selling a small business.)

What is a Business Broker?

A business broker is a professional intermediary who assists business owners in selling their businesses. They evaluate your business, provide guidance on a selling price, confidentially market the business, and vet prospective buyers. Typically, a business broker helps small and lower-middle market business owners, particularly those with limited time or transactional experience.

The goal of a business broker is to get a deal done, often by packaging the business attractively and creating a competitive bidding process. Not all brokers are created equal, and their value must be weighed against the cost.

How is a Business Broker different from an Investment Banker?

Business brokers and investment bankers both provide advisory and consulting services helping business owners navigate the sale process. While largely semantics, most people would say that investment bankers tend to focus on larger enterprise transactions (i.e. enterprise value in excess of $50 million) while business brokers tend to focus on smaller transactions.

How Much Do Brokers Charge to Sell a Business?

So, how much do brokers charge to sell a business? Business brokers (and investment bankers) typically enter into a formal contract, or engagement letter, with their clients that details a number of factors including compensation. These engagements and compensation structures can vary significantly depending on the scope of the project. For a very limited scope of work, for example preparing an offering memorandum or a valuation, the engagement might be a flat fee. If the service provider is an accountant or an attorney, they might prefer to charge by the hour. Most brokers prefer a success fee arrangement.

Business Broker Fees

Business broker fees can vary significantly depending on the size, type, and complexity of the business sale. Typically, brokers charge a commission, or “success fee,” usually structured as a percentage of the final sale price.

Success Fee: Most brokers charge a success fee between 5% and 15% of the final sale price for small businesses. For larger transactions, brokers often use the Double Lehman Formula or Modern Lehman Scale, which tiers fees by price range. The table below shows a standard (not double) Lehman success fee calculation.

Lehman Commission Structure: example showing $12,500,000 sale price

Retainer or Upfront Fee: Some brokers charge an initial fee ($5,000 to $50,000+) to start the engagement. This covers preparation, marketing, and administrative costs.
Minimum Fee: Even for smaller deals, brokers might require a minimum fee, usually between $25,000 and $50,000, regardless of the sale price.

Who Pays the Business Broker Fee?

The seller almost always pays the business broker’s fee, which is usually deducted directly from the sale proceeds at closing. From the buyer’s perspective, there’s no fee, but buyers know that brokered deals might involve more competitive tension and potentially higher prices because of the structured process. Also, it’s a little like “free shipping”. There is no such thing as free shipping – its cost is just baked into the price.

Can You Negotiate Business Broker Fees?

Yes. Broker fees can often be negotiated, especially the upfront retainer. If your business is highly marketable, you can negotiate a lower percentage or a more favorable tiered structure. Just remember: in many cases, you get what you pay for. A good broker should earn their fee through a higher purchase price or a smoother process.

Alternatives to Using a Business Broker: How Else Can You Find the Right Buyer?

Not all businesses need a broker to find the right buyer. If you have a strong network, a desirable business model, or interest from strategic acquirers, you can sell your business without hiring a broker. If you want to sell your business on your own, here are a few tips to help you gain exposure:

Leverage your personal and industry connections.

Quietly test interest with suppliers, customers, or even competitors.

List the business confidentially on curated M&A platforms.

Reach out directly to investment firms or buyer groups aligned with your industry.

What to Do if a Buyer Reaches Out to You? Should You Hire a Broker at This Point?

Hiring a sell-side advisor in response to an unsolicited offer could facilitate a smooth exit, or it could just muddy the waters, with the pain of paying additional fees. If you like the buyer and if you have a good grasp on your company value, hiring a broker at this point in the process is probably not beneficial. If you have no experience in mergers and acquisitions, and are not comfortable managing the sale process without outside guidance, hiring a professional to help could be beneficial.

For more on the pros and cons of hiring a business broker, check out this blog.

The Buyer You Didn’t Know Existed: The Private Investor Who Has Your Best Interests at Heart

Private equity buyers like 1719 Partners often fly under the radar but offer an attractive alternative to traditional brokers or strategic buyers. We partner with owners of specialized manufacturing, value-added distribution, and industrial services businesses. What makes us different?

We have the capital and experience of private equity, without the sharp elbows.

We prioritize legacy, employees, and long-term success, not quick flips.

We can work directly with owners, streamlining the deal process and eliminating the need for a broker.

Let’s Talk

Interested in seeing if we’re the right fit for you and your business? Want to explore how 1719 Partners can help you accomplish your personal and business goals? We’d be happy to have a conversation. Send us a message.