What Does an M&A Advisor Really Cost
A Straight Answer to a Fair Question
“How much is this going to cost?”
It’s one of the first things most owners ask, and for good reason. Selling a business is a high-stakes process, and the economics matter. However, how fees are structured in the M&A world can be confusing, especially if you haven’t been through it before.
This article breaks it down in plain terms. There is no sales pitch, no vague hand-waving, just clarity on how fees typically work and, more importantly, what you’re actually paying for.
Work Fees and Success Fees: The Two Components
Most M&A advisors charge using a combination of two structures:
1. Work Fees
These are fees paid for the upfront work your advisor does to prepare the business, build materials, run outreach, and manage the early stages of the process.
Work fees can be structured in two ways:
Monthly: A flat monthly fee for the duration of the engagement. These may or may not be capped after a certain amount of time or milestone (such as the signing of a Letter of Intent), depending on the scope and expected duration of the project.
Fixed: A set amount for a defined scope of work. These are sometimes due upfront, particularly in time-sensitive situations or where the transaction carries added complexity or risk, such as bankruptcy-related sales. Milestone-based structures may also be used if cash flow is a concern.
At Peninsula Road, our work fees are almost always credited against the success fee, meaning they aren’t in addition to the success fee; they’re a draw against it. That creates alignment and ensures we’re not charging twice for the same work.
Whether fixed or monthly, the right approach depends on your company, the timeline, and how involved the process needs to be. Most firms have a model they lean toward, but there should always be a clear logic behind it.
2. Success Fees
This is the fee paid upon a successful transaction. The point of the success fee is simple: your advisor only wins when you do.
There are multiple ways to structure a success fee:
A flat percentage of the total transaction value
A tiered or laddered fee that increases with higher deal values
Incentive-based fees that reward exceeding valuation thresholds or achieving strategic outcomes
There is no one right model. A good advisor will tailor the structure to match your goals, timeline, and transaction complexity.
Most firms have a structure they prefer and may organically shy away from alternatives, but a clear rationale should always be part of the discussion.
What matters most is that the incentives are aligned and transparent from the beginning.
Alignment Matters More Than Math
No two businesses are the same, and neither are M&A processes. Trying to apply a one-size-fits-all fee structure rarely works. The right fee should:
Reflect the complexity and scale of the transaction
Create shared incentives for buyer quality, timing, and structure, not just headline price
Recognize the advisor’s role as more than a broker, but a strategic partner
We believe in earning our fee. That means doing real work, early and often, not just stepping in at the 11th hour to run numbers or make introductions.
A good fee structure ensures you feel supported and informed, not pressured or surprised.
If you’re unsure whether a proposal is fair, ask how the structure was built and why it fits your situation. There should be a straightforward answer.
What You’re Paying For
Most business owners only go through one sale in their lifetime. And when they ask about fees, what they’re really asking is: “What am I getting for this?”
Here’s the honest answer:
Positioning: Making sure your business is packaged in a way that highlights its strengths and gets real attention from real buyers.
Preparation: Good advisors don’t just send emails. They build full marketing materials: detailed data books, long-form Investment Memos, and proto-data rooms to surface and address diligence issues early. These materials help shape how your business is perceived and prepare you for when buyers ask questions. That’s what your initial work fee is designed to cover: the heavy lifting done before anyone knows a deal is possible. Even if a transaction doesn’t come together, you walk away with clear, professional-grade materials and a stronger understanding of how the market sees your business, which is valuable on its own.
Outreach: Not just finding buyers, but screening them, managing interest, and protecting confidentiality.
Deal Management: Keeping momentum, handling diligence, and managing process fatigue.
Negotiation & Structure: Helping you weigh options, navigate trade-offs, and maximize total value.
Perspective: Someone in your corner who’s not emotional, who’s seen the movie before, and who’s focused on getting the right outcome, not just a fast one.
What About Your Network?
One of the most common questions is: “Who do you know?”
It’s a fair question. However, in the world of LinkedIn, RocketReach, direct buyer access and data-driven sourcing, it may not be the right one.
Your advisor doesn’t need to know everyone. They need to know how to run a process that gets your deal in front of the right people — and in the right way.
Buyers today are professionals. They review dozens of opportunities a year. What matters most is whether the business is well-prepared, thoughtfully packaged, and presented in a way that communicates real value.
Yes, network helps. But it’s not the be-all and end-all. The better question is:
Is this the right advisor for me? Can they run a process that speaks to professionals whose job it is to evaluate opportunities like mine?
That’s where the real value is. Equally important, though harder to measure, is the advisor’s ability to communicate clearly with you, bring perspective, and give you confidence throughout the process. You’re not just hiring access; you’re hiring judgment.
Final Thought: Your Fee Should Reflect the Journey
Selling your business isn’t just a transaction. It’s a process that takes preparation, judgment, and the right partner.
The fee is just the structure. What matters more is whether that structure supports your goals, respects your timeline, and reflects the real work involved. That’s what a good advisor builds with you.
Want to talk about what that might look like for your business?