Selling a company is, in all likelihood, the most important financial transaction in an entrepreneur's life. And in most cases, it is the first and only time they will go through it. Hiring a financial advisor — also known as an M&A advisor or mergers and acquisitions intermediary — to guide the process is the norm in transactions of a certain size, but the structure of their fees raises reasonable questions: how much must be paid before closing? What percentage do they take on the price? Are there minimums even if the sale falls through? This article answers those questions with real market data and no hedging.
What an advisor actually does in a company sale
Before discussing price, it helps to understand what you are buying. An M&A advisor is not a simple broker who connects buyer and seller. Their real work includes:
- Independent valuation of the company (sector multiples, DCF, market comparables).
- Preparation of the Information Memorandum (Cuaderno de Venta) and the approach teaser.
- Confidential identification and outreach to strategic buyers and private equity funds.
- Management of the due diligence process in the virtual data room.
- Negotiation of the price, price adjustments (working capital, net debt) and warranty clauses (representations and warranties, earn-out).
- Coordination with lawyers, auditors and tax advisors through to completion (signing and closing).
A full process typically lasts between 6 and 18 months. The complexity of that work justifies — or does not — the fees described below.
Standard fee structure: retainer + success fee
The remuneration model for M&A advisors in Spain combines two main elements:
1. Retainer or monthly fixed fee
Most advisors charge a monthly fee from the start of the mandate. It serves two purposes: covering the operational costs of the process (hours invested, preparation of the Information Memorandum, travel) and aligning interests by requiring the seller to demonstrate a minimum commitment to the process.
In the Spanish market in 2025–2026, the typical ranges are:
| Transaction size (EBITDA) | Typical monthly retainer | Offset against success fee |
|---|---|---|
| EBITDA < €500,000 | €1,500 – €3,000/month | Usually not offset |
| EBITDA €500,000 – €2M | €3,000 – €6,000/month | Partial (50–100%) in many mandates |
| EBITDA €2M – €10M | €6,000 – €15,000/month | Partial or full offset against success fee |
| EBITDA > €10M | €15,000 – €40,000/month | Generally offsettable |
Source: market reference compiled from public data from associations such as ASCRI and sector estimates for 2024–2025.
It is common for the retainer accumulated over the course of the process to be deducted from the final success fee, particularly in mid-market transactions. In smaller deals (< €2M valuation), some niche advisors do not charge a retainer — but compensate with a higher success percentage — or charge only a one-off upfront fee at the start.
2. Success fee
The most significant component is the success fee: a percentage of the total transaction price that is only paid if the deal closes. This is the sector's incentive alignment mechanism: the advisor wins when the seller wins.
The percentage decreases as deal size increases. The most widely used scale in the Spanish market follows a Lehman or Double Lehman formula (or variants):
| Sale price tranche | Classic Lehman percentage | Double Lehman percentage (common in SMEs) |
|---|---|---|
| First €1,000,000 | 5% | 10% |
| Next million (€1M–€2M) | 4% | 8% |
| €2M–€3M tranche | 3% | 6% |
| €3M–€4M tranche | 2% | 4% |
| €4M–€5M tranche and above | 1% | 2% |
In practice, for companies with a sale price of between €1M and €5M — the bulk of the SME market in Spain — the effective success fee typically ranges between 4% and 8% of the total price. For transactions below €1M, it is common to agree a guaranteed minimum (for example, €40,000–€60,000) regardless of the resulting percentage, to cover the minimum costs of the process.
In transactions above €20M–€30M, the percentage drops sharply and large investment banks negotiate bespoke scales, with effective fees that may sit between 1% and 2.5% of the total.
Factors that push fees up or down
The indicative ranges described above can vary considerably depending on the seller's profile, the sector and the advisor themselves. The key factors are:
Transaction complexity
A company with a dispersed shareholder base, subsidiaries in multiple jurisdictions, complex bank debt, or customer contracts with change-of-control clauses multiplies the advisor's hours. This is reflected in a higher retainer and, in some cases, a higher percentage.
Exclusivity and mandate duration
Most advisors require exclusivity during the process (typically 12 months, renewable). In return, a seller who negotiates a shorter maximum duration or a geographically limited market may obtain a slightly lower percentage.
Sector and company attractiveness
An asset in a sector with high buyer demand — technology, healthcare, specialised services, distribution with a proprietary brand — attracts more potential buyers and reduces the advisor's risk. In highly fragmented or restructuring sectors, the risk is greater and the price rises.
Type of advisor: boutique vs. generalist firm
M&A boutiques specialising in SMEs (with teams of 3–15 people and a clear sector focus) tend to be more affordable and more agile than large advisory firms, which apply more rigid fee structures but provide a broader institutional buyer network. For a company with EBITDA of between €1M and €10M, a specialised boutique is generally the most cost-effective option.
Earn-out and deferred price
If part of the sale price is paid on a deferred basis (earn-out) linked to future results, it must be expressly agreed whether the success fee is calculated on the fixed price only or also on the variable component. This is one of the most contentious negotiation points in the mandate and must be closed in the advisory agreement before work begins.
The M&A process for an SME: phases and associated costs
Beyond the advisor's fees, the seller must budget for other process costs. The table below summarises the typical expenses in a sale transaction for a Spanish SME with a transaction price of €3M–€5M:
| Item | Indicative range | When paid |
|---|---|---|
| Advisor retainer (12 months) | €36,000 – €90,000 | Monthly during the process |
| Advisor success fee | €120,000 – €400,000 (4–8%) | At closing |
| Lawyers (sale and purchase agreement, SPA) | €15,000 – €60,000 | At closing |
| Vendor due diligence audit (optional) | €8,000 – €25,000 | Before going to market |
| Tax advisory (structuring) | €5,000 – €20,000 | Throughout the process |
| Virtual data room (platform) | €500 – €3,000 | During due diligence |
The total transaction cost — combining all items — typically represents between 6% and 12% of the sale price in mid-market transactions. For large transactions (> €20M), that percentage falls below 3–4%.
How to negotiate the mandate with an advisor: key points
The advisory agreement (Letter of Engagement or Sale Mandate) is the document that governs the relationship and must be negotiated carefully. The critical aspects are:
- Success fee calculation base: debt-free price (enterprise value) or the price effectively received by shareholders (equity value). These are not the same thing.
- Tail clause: if the mandate ends without a deal, for how many months does the advisor retain the right to a fee if a buyer they contacted during the mandate ultimately completes the purchase? The market standard is 12–24 months.
- Definition of «closing»: does the fee accrue at signing (execution of the contract) or at closing (actual transfer of funds)? Each approach has different implications if the transaction falls apart between those two dates.
- Earn-out treatment: whether it is included in the fee base and when the variable portion is settled.
- Expense reimbursement: some advisors separate their direct expenses (travel, translation, data room platform) from the retainer. Limits and prior approval should be agreed.
If you need support in structuring this phase, our M&A advisory service accompanies SME owners from the preparation phase through to closing, regardless of transaction size.
When it makes sense to hire an advisor — and when it does not
Not every company sale needs an external advisor. The decision depends on several factors:
- It makes sense: the potential buyer is a competitor or fund with M&A experience that has completed dozens of transactions; the seller has never been through a due diligence; the shareholder structure is complex; the estimated price exceeds €1M.
- It may be dispensable: the company already has a clear buyer (family or partner) and the transaction is straightforward; the price is very low (< €300,000) and the advisory fee would consume a disproportionate share; the seller has prior corporate experience.
Sector market studies — including the ASCRI barometer on M&A activity in Spain and data from Transactional Track Record (TTR) — consistently indicate that advisor-intermediated transactions close at valuations between 15% and 30% higher than non-intermediated ones, with a lower likelihood of breaking down in due diligence due to inadequate document preparation.
Vendor due diligence: the preparatory work that delivers the highest return
One of the most efficient investments before hiring an advisor is to conduct your own vendor due diligence: an internal review of financial statements, customer contracts, corporate structure and potential hidden liabilities. This exercise allows you to enter the sale process without surprises and with the data room ready from day one, which accelerates the timeline and avoids last-minute price renegotiations.
At Summum, we have been accompanying companies through corporate processes since 2007. Our mergers and acquisitions advisory team can help you prepare the company for sale before you even begin the mandate with the transactional advisor.
Frequently asked questions
Can the success fee percentage be negotiated with the advisor?
Yes. The success fee is negotiable, particularly if the company has characteristics that facilitate the sale (attractive sector, clear financials, obvious buyers). The most effective way to negotiate the percentage is through a competitive process: requesting mandates from two or three advisors and comparing proposals. It is also common to negotiate that the accumulated retainer is deducted from the final success fee, reducing the total net cost if the deal closes quickly.
What happens if the process stalls or the company is not sold?
The advisor loses the right to a success fee, but retains the retainers collected up to that point. That is why it is important to negotiate the maximum mandate duration and the grounds for early termination without penalty for the seller. If the process ends without success and the seller resumes the search months later, the tail clause may still apply if the eventual buyer was contacted during the previous mandate.
Does VAT apply to the advisor's fees?
M&A advisory services are subject to the standard VAT rate (21% in Spain), both on the retainer and on the success fee, unless they are structured as intermediation in the transfer of shares, which may benefit from the exemption under Article 20.One.18 of the Spanish VAT Act (LIVA). This point must be analysed on a case-by-case basis with the transaction's tax advisor, as the Spanish Directorate General of Taxes has issued binding rulings with criteria that are not always consistent depending on the exact nature of the service.
Is there a difference between a buy-side and a sell-side advisor?
Yes, and it is important. The sell-side advisor (hired by the seller) has the mandate to maximise price and terms for the exiting shareholder. The buy-side advisor (hired by the buyer) seeks the opposite: to identify attractive assets, value them rigorously and negotiate a lower price. In the same transaction, each party has its own advisor; having the same advisor represent both sides is a conflict of interest that should be avoided and that best practice in the sector prohibits.