Business broker fees in the UK: success fees and retainers explained

How a broker’s fee is usually structured

A sale adviser is paid for two different things: the work of preparing and marketing the business, and the result of getting a deal done. Most UK fee letters reflect that split.

• A retainer: a fixed sum paid upfront, in stages, or monthly while the business is on the market. It is usually payable whether or not a sale happens.
• A success fee: a percentage of the sale price, paid on completion. This is normally the larger part of the total.
• A minimum fee: a floor on the success fee, so that a smaller-than-expected deal still pays the adviser a set amount.
• Expenses and VAT: marketing costs, listing fees or data room charges may be passed on, and VAT is usually charged on top.

The balance between these varies by firm. Price Bailey, a corporate finance adviser, says it typically offers to put 85% to 90% of its own fees on a success-fee basis. Some brokers lean the other way, with a larger retainer and a smaller success fee. Neither model is wrong; they put the risk of no sale in different places.

Published fee ranges

We are not aware of an independent survey of UK broker fees. The figures below come from guides published by firms that sell sale advice or legal services themselves, so they are indicative, not a benchmark. Firms set their own terms, and a quote for a particular business may sit outside these ranges.

The pattern is consistent across sources: the percentage falls as the deal gets larger, because the work of running a sale does not grow in line with the price. A smaller business often pays a higher percentage of a smaller number.

A worked example

The numbers here are invented and round, to show how the pieces combine. They are not a quote, and they say nothing about what any real business would sell for.

Change one term and the total moves. If the letter defines the price to include a £500k earn-out, the fee on that part may be due when the earn-out is paid, or at completion on money not yet received. If there is no retainer credit, the total is £120,000. If the deal falls through, the retainer is still spent.

The terms beyond the percentage

Owners comparing fee letters often focus on the rate. The clauses below can change what is actually paid, and they are where letters from different firms differ most.

• What counts as the price: cash at completion only, or also deferred payments, earn-outs, debt the buyer takes on, and property sold alongside.
• Exclusivity: how long the adviser has the sole right to sell the business, and how either side can end the engagement.
• The tail: how long after the engagement ends a fee is still due if a buyer the adviser introduced goes on to buy. Tail periods vary from firm to firm.
• Buyers you already know: whether a fee applies if the eventual buyer is someone you introduced, such as a competitor or your management team.
• Retainer credit: whether retainer payments are deducted from the success fee on completion.
• Abort fees: whether anything is due if you decide not to sell after an offer is agreed.

This is general information, not advice. A fee letter is a contract, and many owners ask their solicitor to read it before signing.

The other costs of a sale

The broker is rarely the only professional paid. A solicitor drafts or negotiates the sale agreement and the disclosure letter, and an accountant usually helps with completion accounts, tax and the buyer’s financial due diligence questions.

Published guides again come from firms selling these services. Forbes Burton puts legal fees at at least 1% of the price and specialist accounting at 0.5% to 1%, and Carbon Law Partners, a law firm, put the average solicitor fee at around 1% of the transaction value when it wrote in 2019. Many solicitors quote a fixed fee or a capped estimate instead, so it is common to ask.

Then there is tax on the proceeds, which depends on the structure of the sale and is outside the scope of this guide. An accountant or tax adviser can explain how it applies to a particular sale.

What the fee pays for

A good adviser earns the fee in work an owner rarely sees: preparing the teaser and information memorandum, building a buyer list, keeping the sale confidential, running several buyers at once so that offers compete, and negotiating terms with buyers who do this for a living. Many owners consider the fee worth it for that reason alone.

Questions owners commonly ask before choosing one: how many comparable sales the firm has completed, who will do the work day to day, how the firm finds buyers, and what happens to the fee if the sale takes longer than planned. Our guide to how long a sale takes covers the timescale side of that question.

Some owners, usually of smaller businesses with an accountant they trust, run the sale themselves instead. That route is covered in selling your business without a broker.

Where teasr fits

Unlike a broker, teasr is software. It never acts for a seller and never takes a percentage of a sale. Advisers use it to prepare the teasr and memorandum, check the figures and run the data room, and pay a subscription per firm. Owners who want to run the sale themselves can use the same tools on a monthly plan with no success fee. Both are set out on pricing, and the adviser side on for advisers.

Whichever route an owner takes, buyers tend to ask the same questions about the figures. The free readiness check shows which of yours a buyer is likely to question. It does not value the business.