M&A advisor fee calculator
Translate any sell-side fee proposal into dollars: Lehman, double Lehman, custom tiers or a flat rate, with minimum fees and retainers, and every structure compared at the same price.
How to use the calculator
- 1Enter the price you expect, then repeat at your realistic low case and your stretch case: the fee formula matters most at the edges.
- 2Choose a structure. Modified Lehman opens an editor for any tier schedule, including an accelerator with a higher rate above a target price.
- 3Add the minimum fee and retainer terms from the proposal in front of you. The comparison table applies the same terms to every structure.
- 4Copy the link to share or save the exact calculation; every input is stored in the address.
Results
On a $25,000,000 transaction, the double Lehman formula produces a success fee of $700,000. Total paid to the advisor is $700,000, an effective rate of 2.80%.
- Success fee
- $700,000
- 2.80% of transaction value
- All-in effective rate
- 2.80%
- Total cost divided by transaction value
- Due at closing
- $640,000
- After $60,000 retainer credit
- Total paid to advisor
- $700,000
- Includes $60,000 of retainers
| Tranche | Rate | Value in tranche | Fee |
|---|---|---|---|
| First $1M | 10% | $1,000,000 | $100,000 |
| $1M to $2M | 8% | $1,000,000 | $80,000 |
| $2M to $3M | 6% | $1,000,000 | $60,000 |
| $3M to $4M | 4% | $1,000,000 | $40,000 |
| Above $4M | 2% | $21,000,000 | $420,000 |
| Formula fee | $700,000 | ||
| Success fee | 2.80% | $700,000 | |
| Less retainers credited | −$60,000 | ||
| Due at closing | $640,000 | ||
| Retainers paid during the engagement | $60,000 | ||
| Total paid to advisor | 2.80% | $700,000 |
Expenses are excluded. Rates in the success fee and total rows are effective rates on the full transaction value.
| Structure | Formula fee | Success fee | Total paid | Effective rate |
|---|---|---|---|---|
| Lehman (5-4-3-2-1) | $350,000 | $350,000 | $350,000 | 1.40% |
| Double Lehman (10-8-6-4-2)selected | $700,000 | $700,000 | $700,000 | 2.80% |
| Modified (your tiers) | $600,000 | $600,000 | $600,000 | 2.40% |
| Flat 2.5% | $625,000 | $625,000 | $625,000 | 2.50% |
The same minimum fee and retainer terms are applied to every structure. The highlighted row is the structure selected above.
Arithmetic illustration only. The calculator applies the schedule you enter to the value you enter; it is not a quote, valuation, offer or advice, and it excludes expenses and the effect of how an engagement letter defines transaction value.
How each formula works
Every structure in the calculator is a schedule of tiers. Each tier applies its rate only to the slice of transaction value between the previous breakpoint and its own, the way income tax brackets work. The fee is the sum of the slices. A minimum fee then sets a floor under that sum, and retainers are added on top or credited against it.
Lehman formula (5-4-3-2-1)
The original Lehman formula charges 5% of the first $1M of transaction value, 4% of the second, 3% of the third, 2% of the fourth and 1% of everything above $4M. The first four tranches always add up to $140,000 once a deal passes $4M, so on any larger deal the fee is $140,000 plus 1% of the excess. On a $25M sale that is $140,000 + 1% × $21M = $350,000, an effective rate of 1.40%.
| Tranche | Lehman rate | Value in tranche | Lehman fee | Double Lehman rate | Double Lehman fee |
|---|---|---|---|---|---|
| First $1M | 5% | $1,000,000 | $50,000 | 10% | $100,000 |
| $1M to $2M | 4% | $1,000,000 | $40,000 | 8% | $80,000 |
| $2M to $3M | 3% | $1,000,000 | $30,000 | 6% | $60,000 |
| $3M to $4M | 2% | $1,000,000 | $20,000 | 4% | $40,000 |
| Above $4M | 1% | $21,000,000 | $210,000 | 2% | $420,000 |
| Total | $25,000,000 | $350,000 | $700,000 |
Arithmetic illustration computed with the same code as the calculator. Not a quote, valuation or offer.
Double Lehman (10-8-6-4-2)
The double Lehman doubles every rate: 10%, 8%, 6% and 4% on the first four $1M tranches, then 2% above $4M. The first $4M produces $280,000 and every dollar above it 2%, so the fee is exactly twice the Lehman fee at any deal size. On the same $25M sale it is $700,000, or 2.80%. It is a common reference point for smaller lower middle market sell-side mandates, and expensive in percentage terms below about $10M.
Why double? The tranche sizes were never indexed for inflation. Accounts date the formula to the 1960s or early 1970s. Measured from December 1970, the later of those dates, the Bureau of Labor Statistics consumer price index (CPI-U) rose by a factor of 8.14 to December 2025, so a $1M tranche of that era corresponds to roughly $8.1M in late-2025 dollars. The original schedule therefore charges its highest rates on a much smaller slice of real value than it once did. Doubling the rates is a rough correction, not an inflation adjustment.
Modified Lehman (custom tiers)
Modified Lehman is a catch-all for any custom schedule: tranches of $5M or $10M instead of $1M, different rates, more or fewer tiers, usually combined with a minimum fee. The illustrative schedule from our fee guide, 3% of the first $10M and 2% above with a $400,000 minimum, produces $300,000 from the percentages on a $10M deal; the minimum lifts the fee to $400,000, an effective 4.00%. Use the tier editor to enter the exact schedule in a proposal.
Flat percentage
A flat fee applies one rate to the entire transaction value. It is simple to model and common on larger deals, but it pays the advisor the same rate on the last dollar of price as on the first. Combined with a minimum fee, a flat rate can cost more than a declining schedule at the low end: 3% with a $500,000 minimum is an effective 5% on a $10M sale.
| Transaction value | Lehman | Double Lehman | Modified: 3% to $10M, 2% above, $400K minimum |
|---|---|---|---|
| $2M | $90,000 (4.50%) | $180,000 (9.00%) | $400,000 (20.00%)* |
| $5M | $150,000 (3.00%) | $300,000 (6.00%) | $400,000 (8.00%)* |
| $10M | $200,000 (2.00%) | $400,000 (4.00%) | $400,000 (4.00%)* |
| $25M | $350,000 (1.40%) | $700,000 (2.80%) | $600,000 (2.40%) |
| $50M | $600,000 (1.20%) | $1,200,000 (2.40%) | $1,100,000 (2.20%) |
| $100M | $1,100,000 (1.10%) | $2,200,000 (2.20%) | $2,100,000 (2.10%) |
* Minimum fee applies. Arithmetic illustration only; the modified schedule is hypothetical. Fees exclude retainers and expenses.
What is typical
Effective success-fee rates decline as transaction value rises, because the work in a sale process does not scale with price. The ranges below are the same indicative ranges published in our guide to M&A advisor fees. They are wide on purpose: complexity, sector, the number of likely buyers and whether the owner already has an interested party all move the number. Use the calculator to see where a specific proposal falls.
| Transaction value | Typical intermediary | Indicative effective success fee | Common structure |
|---|---|---|---|
| Under $2M | Business broker | ~8%–12% | Flat percentage, often with a minimum |
| $2M–$5M | Business broker or small advisor | ~5%–10% | Flat percentage or double Lehman |
| $5M–$10M | M&A advisor | ~3%–6% | Double Lehman or modified, with minimum |
| $10M–$25M | M&A advisor | ~2.5%–5% | Modified Lehman or tiered with minimum |
| $25M–$50M | M&A advisor or boutique bank | ~2%–4% | Tiered or flat, sometimes with accelerator |
| $50M–$100M | Boutique or middle-market bank | ~1.5%–3% | Flat or base plus accelerator |
| Over $100M | Middle-market or larger bank | ~1%–2% | Flat or base plus accelerator |
Ranges are indicative only, based on general market practice rather than any single survey; they vary with market conditions, deal complexity and company specifics, exclude retainers and expenses unless credited, and are not a valuation or offer.
For the full picture of retainers, transaction value, tails and how to evaluate an advisor, read our guide to M&A advisor fees and engagement terms.
Engagement letter terms that change the real cost
The formula is only one line of an engagement letter. The terms below decide what you actually pay, and several of them matter more than a half-point on the headline rate.
Retainers and whether they are credited
A retainer is paid whether or not a deal closes. In the lower middle market it is commonly a few thousand to the low tens of thousands of dollars a month. Credited retainers are deducted from the success fee at closing; uncredited retainers are paid on top. With a $10,000 monthly retainer for six months on the guide's $25M example, the total cost is $600,000 (2.40%) if the retainer is credited and $660,000 (2.64%) if it is not.
Minimum fee
A minimum fee is standard: a process takes roughly the same work at $8M as at $15M. It deserves attention because at smaller values it, not the percentage, sets what you pay. Compare the minimum with the fee the formula produces at your realistic low-case price; if the minimum is higher, the formula is decoration at that price.
Accelerators
An accelerator applies a higher rate to value above a target price, so the advisor earns more on the dollars that are hardest to win. Our guide's example is 2% up to $40M plus 4% above. At $40M the fee is $800,000; at $46M it is $1,040,000, an effective 2.26%. Enter it in the calculator as a modified schedule with a rising final tier. The threshold is the critical input: anchor it to the advisor's own valuation view, not to a price the market will clear easily.
Definition of transaction value
The calculator applies the schedule to a single number. In a real letter, that number is defined: usually total consideration including assumed debt, and often escrows, earnouts, seller notes, rolled equity and payments to owners. Seller-friendly drafting pays the fee on earnouts and notes only as they are received, and treats rollover and separately sold real estate explicitly.
Tail, exclusivity and expenses
- Tail: the advisor is owed its fee if a deal closes within a period after termination, commonly twelve to eighteen months. Limit it to parties the advisor contacted or introduced, named in writing at termination.
- Exclusivity: commonly six to twelve months, then month to month. Limit the scope to a sale of the company rather than every financing or minority investment.
- Expenses: out-of-pocket costs are commonly reimbursed on top of the fee. Ask for a cap, often in the low tens of thousands of dollars, with pre-approval above it and no internal markups. The calculator excludes expenses; add the cap to the total for a full picture.
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<a href="https://laurent.capital/tools/m-and-a-fee-calculator">M&A advisor fee calculator: Lehman, double Lehman and modified Lehman</a> (Laurent Capital)Frequently asked questions
How do you calculate the Lehman formula?
Apply 5% to the first $1M of transaction value, 4% to the second $1M, 3% to the third, 2% to the fourth and 1% to everything above $4M, then add the pieces. For any deal above $4M this simplifies to $140,000 plus 1% of the value above $4M. A $25M sale produces $350,000, an effective 1.4%.
What is the double Lehman fee on a $10 million sale?
$400,000. The first $4M produces $280,000 (10%, 8%, 6% and 4% of each $1M), and 2% of the remaining $6M adds $120,000. That is an effective rate of 4.0%, before any minimum fee, retainer or expenses.
What is a modified Lehman formula?
Any custom tiered schedule that departs from the original 5-4-3-2-1 on $1M tranches: larger tranches such as $5M or $10M, different rates, fewer tiers, or a rising rate above a target price. Most modified schedules are paired with a minimum fee. Enter the exact tiers from a proposal in the calculator to see the fee in dollars.
Should the retainer be credited against the success fee?
In most competitive lower middle market proposals, retainers are credited against the success fee, fully or in part. If they are not, they add directly to your cost. The calculator shows both cases; toggle the credit option to see the difference in dollars.
Why does the effective rate fall as the deal gets bigger?
Because declining schedules charge their highest rates on the first dollars of value, and every additional dollar is charged at the lowest rate. A sale process also takes broadly similar work at $15M as at $30M, which is why minimum fees exist and why effective rates on larger deals are lower.
Is the fee from this calculator what an advisor will charge me?
No. The calculator does the arithmetic for a schedule you enter. Actual fees are negotiated and depend on deal size, complexity, sector and the definition of transaction value in the engagement letter. Use it to translate proposals into dollars at several prices and compare them on the same basis.
Methodology and sources
For a schedule of tiers with cumulative breakpoints b0 = 0 < b1 < … < bn = ∞ and rates r1 … rn, the formula fee on transaction value V is the sum over tiers of ri × max(0, min(V, bi) − bi−1). The success fee is the larger of the formula fee and the minimum fee. Retainers paid equal the monthly retainer times the number of months. If retainers are credited, the credit is the lesser of retainers paid and the success fee, and the amount due at closing is the success fee less the credit. Total paid to the advisor is the amount due at closing plus retainers paid. The all-in effective rate is total paid divided by V. Expenses are excluded.
Lehman is 5%, 4%, 3%, 2% on successive $1M tranches and 1% above $4M; double Lehman doubles each rate. The comparison table applies the same minimum fee and retainer terms to every structure. All amounts are rounded to the cent internally and displayed to the dollar. The arithmetic is unit-tested against the worked examples in our fee guide (Lehman and double Lehman at $10M, $25M and $50M; the modified schedule with a $400,000 minimum; the $46M accelerator; the $25M total-cost example).
History: the formula is widely attributed to Lehman Brothers. Investopedia dates it to the 1960s and Wikipedia to the early 1970s; we found no primary Lehman Brothers document confirming either date, so the page gives both. The inflation comparison uses BLS CPI-U values for December 1970 (39.8) and December 2025 (324.054); December was used because October 2025 is missing from the series. Typical fee ranges are indicative ranges from general market practice, published in our fee guide, not the result of a survey.
- 1Investopedia, “Lehman Formula Explained: Commission Calculation for Investment Banks”. States that Lehman Brothers developed the formula in the 1960s; gives the 5-4-3-2-1 and double Lehman schedules. Retrieved 2026-10-26
- 2Wikipedia, “Lehman Formula”. Dates the formula to the early 1970s and describes later variants; the article is flagged as needing more citations. Retrieved 2026-10-26
- 3US Bureau of Labor Statistics, CPI-U, US city average, all items (series CUUR0000SA0). December 1970: 39.8; December 2025: 324.054. Retrieved through the BLS public API on 2026-10-26
- 4Laurent Capital, “M&A Advisor Fees and Engagement Terms”. Source of the indicative fee ranges, the illustrative modified schedule and the accelerator and total-cost examples
Data last updated October 26, 2026.
Cite this tool
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Citation
Laurent Capital Research, “M&A Advisor Fee Calculator: Lehman, Double Lehman and Modified Lehman,” 2026, https://laurent.capital/tools/m-and-a-fee-calculatorLink (HTML)
<a href="https://laurent.capital/tools/m-and-a-fee-calculator">M&A Advisor Fee Calculator: Lehman, Double Lehman and Modified Lehman</a> (Laurent Capital)Last updated . This tool and its content are for general educational purposes only and do not constitute investment, legal, tax or accounting advice. Fee figures are arithmetic illustrations or indicative ranges, vary with market conditions and the specifics of each company, and are not a quote, valuation or offer. Have M&A counsel review any engagement letter. See our Important Disclosures.
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