By Andreas Pettersson, Founder, Leaders ADAPT
Somewhere in the last year you typed your revenue into a valuation calculator and liked the number. Then you searched business broker vs M&A advisor and found two industries describing themselves. This page is written from the owner's chair.
I have sold a company and lived with an earnout afterward, and I have sat across the table from the people on this page as a buyer inside a global corporation. The fee structures below are public. The incentives behind them are not written anywhere, and they decide more of your outcome than the percentages do.
The short version. A business broker lists and sells small companies for a commission. An M&A advisor runs a structured sale for mid sized companies on a retainer plus a success fee. An investment banker does the same for larger companies at a higher minimum. All three are paid when the deal closes, so all three want a closing. The third seat, an independent exit readiness advisor, is paid a fixed fee to get the company ready before any of them is hired, and is the only one who can tell you to wait.
Quick answer: A business broker sells companies under about $5 million for a commission near 10 percent at closing. An M&A advisor runs a structured sale for companies from roughly $5 million to $50 million on a retainer plus a success fee, often a Lehman style sliding scale. An investment banker serves larger deals. All are paid on closing. An independent exit readiness advisor is paid a fixed fee beforehand to make the company sellable.
Leaders ADAPT sells exit readiness, advisory and fractional engagements on a fixed fee quoted per engagement. We are not a business broker, an M&A advisor or an investment bank, and no broker, advisor or bank named or linked on this page pays us. Every fee figure belongs to the source it is linked to, with the month I read it. If a figure has changed, their page wins.
Business broker vs M&A advisor vs investment banker: the comparison table
Three sell side seats and one that is not. Deal size bands come from BizQuest and from the IBBA and M&A Source Market Pulse survey, which treats $5 million to $50 million as the lower middle market. Fee shapes are from the sources linked below.
| Business broker | M&A advisor | Investment banker | Independent exit readiness advisor | |
|---|---|---|---|---|
| Typical deal size | Under $5 million, most under $1 million | About $5 million to $50 million | Usually above $25 million, most above $50 million | Any size, hired 12 to 24 months before a sale |
| Who hires them | The seller | The seller, sometimes the buyer | The seller or the buyer | The owner |
| How they are paid | Commission at closing, about 10 percent under $1 million | Retainer plus success fee, often a Lehman scale | Retainer plus success fee, lower percentages, high minimums | Fixed fee, not tied to the transaction |
| Paid if no sale | Usually nothing, sometimes a valuation fee | The retainer, often $5,000 to $50,000 | The retainer | The full fee, because the work is the readiness, not the sale |
| What they do | List the business, screen buyers, manage the paperwork | Prepare the book, run a competitive process, negotiate structure | Same, with larger buyer universes and financing | Fix leadership, operations and technology gaps before diligence finds them |
| What they want | A closing | A closing at the highest price the process produces | A closing, and the next mandate | The owner to know whether the company is ready |
The fourth column is the point of this page. Everyone else in the table is paid when the company changes hands. That is the shape of their business, not a criticism, and it is why none of them is the right first call.
What a business broker charges and who the broker works for
A business broker sells Main Street companies. Restaurants, trades, agencies, small manufacturers, most under $1 million in price and nearly all under $5 million. The broker values the business, lists it, screens buyers and carries the deal to closing.
Business broker fees are the simplest in this market. BizQuest puts the typical commission at 10 percent of the sale price for businesses under $1 million, within a range of 8 to 15 percent, with a lower rate on sales between $1 million and $5 million and a minimum fee that usually runs $10,000 to $25,000. Most brokers do not take a retainer, though some charge for the valuation. Wikipedia's summary of US practice describes a common variant: 10 percent up to a target price and 12 percent on anything above it, with a minimum around $50,000 and a preparation fee of around 1 percent of revenue.
Who does the broker work for? Formally, you. Practically, the broker is paid a percentage of a number, once, at closing. A broker with thirty listings runs a volume business, and volume rewards the deal that closes this quarter over the one that closes at a better price next year.
That is fine when the company is simple and the owner is the business. It is a problem when the company is worth more than its listing suggests, which is common for owners who built a real management layer and do not know what it is worth to a buyer. Read how much is my business worth before you sign anything with a percentage in it.
What an M&A advisor charges: retainers, success fees and the Lehman formula
M&A advisory services cover the lower middle market, which the Market Pulse survey defines as $5 million to $50 million in enterprise value. Below $2 million the survey values businesses as a multiple of seller's discretionary earnings. From $2 million up it uses EBITDA multiples, and in the second quarter of 2026 the $5 million to $50 million band traded at 5.8 times, its highest since early 2022.
The advisor does more than list the company. They write the information memorandum, build a buyer list of strategic and financial acquirers, run a timed competitive process, manage the data room, and negotiate price and structure, including the earnout that decides what you actually receive.
M&A advisor fees have two parts. BizQuest reports retainers of $5,000 to $50,000, often credited against the success fee at closing, and minimum success fees of $35,000 to $50,000. The success fee is where the Lehman formula comes in.
The original Lehman scale pays 5 percent on the first $1 million of deal value, 4 percent on the second, 3 percent on the third, 2 percent on the fourth and 1 percent on everything above $4 million. The Double Lehman variant from the 1990s doubles every tier: 10, 8, 6, 4 and 2 percent. A Modern Lehman variant runs 10 percent on the first million and steps down one point per million to 3 percent above $8 million. On a $10 million sale, Double Lehman produces $400,000 and Modern Lehman roughly $580,000. Many advisors quote a flat percentage instead, and the percentage is negotiable.
Two more facts belong here. Since March 29, 2023, a federal statute has exempted M&A brokers from broker dealer registration when the company sold has EBITDA under $25 million or gross revenues under $250 million and the buyer will actively manage the business. The text sits in 15 U.S. Code 78o(b)(13). It means most advisors in your deal size are not required to be registered, which puts the diligence on the advisor back on you.
And the time. The Q2 2026 Market Pulse release, built from 255 brokers and advisors reporting 181 closed transactions, put the average time from engagement to close at 6 to 10 months for Main Street deals and 11 to 12 months for the lower middle market. Add the preparation you should have done first, and a sale is a two year project.
Deal size bands: which seat fits a $2 million, $10 million or $40 million company
Investment banker vs business broker is rarely the real choice. The bands sort most owners quickly.
Under $2 million in value, a business broker. The company is priced on seller's discretionary earnings, the buyer is usually an individual, and the broker's marketplace is where those buyers are.
$2 million to $5 million, the gray zone. Brokers handle most of these. An advisor takes the deal when the company has a management team and a buyer universe worth a competitive process. BizQuest puts brokers under $5 million and notes that most advisors prefer $25 million and up, so an advisor who takes a $3 million deal is choosing it.
$5 million to $50 million, an M&A advisor. This is the lower middle market, where strategic buyers and private equity show up, EBITDA multiples apply, and structure, earnouts and rollover equity decide the real price.
Above $50 million, an investment bank. Larger buyer universe, financing relationships, and fee percentages that fall as the deal grows.
The band tells you which agent to hire, not whether to hire one yet. The Exit Planning Institute's owner readiness research reports that only 20 to 30 percent of businesses that go to market actually sell. The ones that do not sell paid retainers and spent a year in the process. The ones that sell below expectation paid full success fees on the lower number.
The incentive problem nobody puts in the engagement letter
Every fee structure in this market pays for a closing. A retainer pays for the process to start. A success fee pays for it to end. Nothing in the standard letter pays the advisor to tell you the company is not ready. Follow the incentive on three decisions.
Timing. Your advisor's revenue arrives when the deal closes, so the advisor wants to launch when you sign, not after you have spent a year fixing the management team. A good advisor will tell you to wait anyway. The fee structure does not reward them for it.
Price versus certainty. On a Double Lehman scale, the last $2 million of a $12 million sale earns the advisor $40,000. The first $4 million earned $280,000. The marginal dollar of your price is worth a lot to you and little to the person negotiating it. That is arithmetic, not an accusation, and it is why you need to understand the structure you are signing.
Structure. The earnout, the rollover, the seller note and the working capital peg move money between you and the buyer without changing the headline number the success fee is calculated on. Read earnout before you let anyone negotiate one for you.
None of this means you should sell without an advisor. A good M&A advisor earns the fee many times over through a competitive process. It means you should hire them when the company is ready, and that the person who tells you whether it is ready should not be paid on the closing.
The third seat: an independent exit readiness advisor
The third seat works for the owner before any sell side agent is hired. The fee is fixed and quoted per engagement after a first call, and it does not change whether the company sells in 18 months or never. That is the whole design. The advisor has nothing to gain from your launch date.
The work at Leaders ADAPT is a read on the three things a buyer will test and a broker's valuation will not: leadership, operations and technology. Can the company run for a quarter without you? Does a second in command exist, and does the team follow them when you are out of the room? Are the numbers clean enough for a quality of earnings review? Is the know how in people's heads or in systems a buyer can inherit? Then a plan to close the gaps over 12 to 24 months, with the owner doing the work and the bench next to them.
Three people from the bench carry most of this. Steve Shaw is the fractional CFO on the bench, twenty years in finance leadership, and he works with owners on clean books, cash discipline, financial positioning before a sale and the numbers conversation with buyers and lenders. Thor Legvold is the leadership psychologist on the bench. He runs the assessments, executive fit and team dynamics behind the people decisions in a sale, including whether the second in command can hold the company. Sergey Dmitriev is the fractional CTO and AI systems partner, and he reads the technology and data side.
The pattern I see most: an owner grew the company on grind, tried to hire a general manager, it failed, and now wants to sell rather than try again. What they have not seen is that a buyer prices the missing second in command, through a lower multiple, a longer earnout or a two year employment clause for the owner. The sell side agent will tell you that at the letter of intent. The readiness advisor tells you two years earlier, when you can still fix it. Key person risk and what buyers look for in a management team go deeper on both.
The landing spot of this seat is not sell now. It is find out whether you are ready for the exit you are now excited about. The full scope is on exit readiness, and the owner's wider options are on exit strategy for business owners.
Where AI fits in a sale process
AI has changed the sell side faster than the fee structures have. Brokers and advisors now use it to draft the information memorandum, screen buyer lists and run the data room. Expect a faster process. Do not expect a lower fee, because the fee is a percentage of your price, not of their hours.
On the owner's side, AI is more useful before the process than during it. Three uses show up in readiness work. A company knowledge system that captures how the business actually runs, so a buyer inherits a system instead of your memory. Clean, reconciled monthly financials, which a quality of earnings review will test. And an honest read of where the company depends on you, which AI can surface from calendars and approval patterns faster than any interview.
Two limits. A buyer will test whether AI in your company is a tool the team uses or a slide the owner shows, and companies on EOS or a similar operating system should read AI for EOS companies for how the two fit. And the decisions in a sale, who to tell, when to launch, what to accept, are exactly what not to delegate to AI. Use it for the readiness work. Keep the judgment.
What a broker or M&A advisor does not fix
Neither one fixes a company that depends on the owner. The memorandum can describe the dependence in flattering language. The buyer's diligence team will find it and price it.
Neither one fixes a leadership team that has never run a quarter without you. The buyer is buying the team's next twelve quarters, not your history, and the leadership team development guide covers what that team needs before anyone writes a check.
Neither one fixes numbers that take three weeks to close. A broker will list the business anyway. An advisor will tell you to get a sell side quality of earnings done and bill you for the delay.
And neither one fixes the owner's own readiness. The two reasons CEOs book a call with me more than any others are that they hate one on ones and that delegation boomerangs back. Both are symptoms of a company that will not run without its owner, and both are visible to a buyer within a week of diligence. Prepare business for sale is the checklist for the company. The checklist for the owner starts with those two habits.
Business broker vs M&A advisor FAQ
What is the difference between a business broker and an M&A advisor?
A business broker sells small companies, typically under $5 million, lists them to a pool of buyers and is paid a commission of around 10 percent at closing. An M&A advisor runs a structured sale for companies from roughly $5 million to $50 million, charges a retainer plus a success fee, and negotiates with a curated set of strategic and financial buyers. The advisor does more work per deal and the fee structure reflects it.
How much does a business broker charge?
Published US figures put the standard broker commission at about 10 percent of the sale price for businesses under $1 million, with a range of 8 to 15 percent, and a lower rate on sales between $1 million and $5 million (BizQuest, read October 2026). Most brokers set a minimum fee, often $10,000 to $25,000, and many do not charge an upfront retainer, though some bill separately for a valuation.
What are typical M&A advisor fees?
M&A advisors usually charge a retainer plus a success fee. BizQuest reports retainers of $5,000 to $50,000, often credited against the success fee at closing, and minimum success fees of $35,000 to $50,000. The success fee itself is often a sliding scale such as the Double Lehman formula, 10 percent on the first million falling to 2 percent above $4 million, or a flat percentage negotiated per deal.
What is the Lehman formula?
The Lehman formula is a sliding scale for sell side fees. The original scale pays 5 percent on the first $1 million of deal value, 4 percent on the second, 3 percent on the third, 2 percent on the fourth and 1 percent on everything above $4 million. The Double Lehman variant doubles each tier to 10, 8, 6, 4 and 2 percent and is the more common form in the lower middle market today.
Does an investment banker make sense for a company under $50 million?
Rarely below about $25 million in enterprise value, and the market agrees. Most investment banks set minimum fees that only make sense on larger deals, and the M&A advisor seat exists because it covers $5 million to $50 million companies with a similar process at a cost the deal can carry. Above $50 million the banker seat becomes the normal choice, and the fee percentages fall as the deal grows.
Whose side is a sell side advisor actually on?
A sell side advisor is engaged by the seller and paid by the seller, so the formal answer is yours. The honest answer is that a success fee pays the advisor for a closing, not for the best closing, and a retainer that ends when the deal does rewards speed. Read the engagement letter for what is paid if you walk away, and ask who else the advisor is representing in your industry.
What does an independent exit readiness advisor do?
An independent exit readiness advisor works for the owner before any broker or M&A advisor is hired, on a fixed fee that does not depend on whether or when the company sells. The work is a read on leadership, operations and technology against what buyers will test in diligence, followed by a plan to close the gaps over 12 to 24 months. The advisor has no stake in the transaction and can tell the owner not to sell yet.
Hire the third seat first
The sequence most owners follow: call a broker or an advisor, get a valuation that flatters, launch, discover in diligence what a readiness read would have found two years earlier, and accept a lower price or a longer earnout to get the deal done.
The sequence that works: get an independent read on leadership, operations and technology first, with a fixed fee and no stake in the outcome. Close the gaps over 12 to 24 months. Then hire the right seat for your deal size, with a fee structure you understand, and let them run a process on a company that is ready.
The business broker vs M&A advisor question has a clear answer by deal size. The question underneath it, whether to hire either of them yet, is the one this seat exists to answer. The first step is free: the assessments and a call.
What the first conversation looks like
It is a 30 minute call with me. You tell me when you want to be out and what the company looks like without you in it for a month. I tell you what I think a buyer will find in the first two weeks of diligence, and whether a readiness engagement would change it. If the company is ready and what you need is a broker or an M&A advisor, I say so and the call ends there.
If we work together, the engagement is a fixed fee quoted after that call, and it runs as a read on leadership, operations and technology with Steve, Thor and Sergey on the relevant parts, followed by a written plan the owner can execute over 12 to 24 months. I stay in the room for the leadership side, because that is where most of the value is built.
Your first step for tomorrow morning: take the free leadership and AI readiness assessments, then write down who would run the company if you stepped away for a month. If that line is hard to write, read exit readiness and bring the page to the call. That is the business broker vs M&A advisor conversation worth having before either one gets hired.
