What a broker costs, and how the fee is structured

The short version

Most brokers are paid a success fee at closing, a percentage of the sale price.
On smaller sales the figure most often quoted is between eight and twelve percent. The rate usually steps down as the price rises.
A minimum fee and an upfront retainer can move your real cost more than the headline rate.
Every fee is negotiable. The only number that matters is the one in your agreement.

Why fees look the way they do

A good broker earns the fee for many owners. Smaller sales often need as much hands-on work as larger ones: preparing the [confidential information memorandum](/learn/reference#confidential-information-memorandum "The document that describes a business for sale to a buyer who has signed a non-disclosure agreement. The numbers, the history, the customers, the people and the reason for selling.") (CIM) that buyers read, finding and screening buyers, keeping the deal alive. That is why the percentage is usually higher on smaller sales.

The success fee

Most brokers are paid a success fee at closing, a percentage of the sale price. Published guidance varies, but on smaller sales the figure most often quoted falls somewhere between eight and twelve percent. As the price rises the percentage usually steps down, so a bigger sale pays a lower rate on the later dollars.

These are ranges commonly published by brokerages and advisory firms. Published figures differ, and no neutral survey tracks commissions.

Two things that can move the real cost

A minimum fee is the least the broker will accept, whatever the percentage works out to. On a small sale it can work out well above the stated rate.

A retainer is an upfront or monthly payment made before any sale. Some agreements credit it against the fee at closing. Some do not.

What the fee is calculated on

Ask what counts as the sale price. Some agreements include money paid later: a note you carry, payments tied to future results or real estate sold alongside the business. The same percentage produces a very different fee depending on what it is applied to.

Three terms to read closely

Every broker is different, every fee is negotiable, and the only number that matters is the one in your agreement. Before signing, read three things closely:

The minimum fee.
Whether the retainer is credited against the fee at closing.
The tail provision. This can leave you owing a fee after the agreement ends if you sell to a buyer the broker introduced.

"What is your fee, and how does the rate change as the price rises?" Listen for: a clear schedule you can see on paper.
"Is there a minimum fee? What would I pay if the business sold for less than expected?" Listen for: an actual dollar amount. Work out what that is as a percentage of a lower price to see your real rate.
"Is there a retainer, and is it credited at closing?" Listen for: a plain yes or no, written into the agreement.
"What counts as the sale price for your fee?" Listen for: whether a note you carry, later payments or real estate are included.
"How long does your tail provision last, and which buyers does it cover?" Listen for: a set period, and only buyers the broker actually introduced, listed in writing.

This names the question. Your CPA, your M&A attorney and your lender answer it for your situation.