Dr Allen Nazeri DDS MBAHealthcare M&A Expert

Dollars and Deals: How Brokers, M&A Advisors, and Investment Bankers Make Their Money | PRIME exits™

5 May 2024 · 1 min

Watch on YouTube

1:27

YouTube video transcript in which Dr. Allen Nazeri (DDS, MBA) explains how intermediaries (brokers, M&A advisors, investment bankers) are typically paid when selling companies. He reviews common fee structures — success fees, retainers/upfront fees, monthly fees, warrants/stock options — and gives typical percentage ranges tied to deal size and advisor type, stressing that fees are negotiable and sector experience matters.

Questions this video answers

Approximately 8% to 15% of the transaction.

Approximately 5% to 10% of the transaction.

As low as 1% to 3% of the transaction (speaker noted a minimum retainer/upfront fees are common).

The speaker states his practice typically works solely on a success fee — they only get paid if the seller gets paid.

Chapters

Typically, all different types of intermediaries, whether it's brokers or M and A advisors or investment bank bankers, they work on some sort of a success fee. And that success fee can vary depending on the size of transaction and who is actually representing you as the seller of a company. Now, in most situations, most brokers and investment bankers, they do ask for retainers, upfront fees and monthly fees and some sort of a stock option or warrants to in order to support their effort for tapping into resources to be able to, you know, represent you and get you all the way to the finish line. I know it is in our business, in our practice, we typically work solely exclusively on a success fee. So we only get paid if you get paid. But.
In general, the broker fees can range anywhere between about 8 to 15% of the transaction. And typically brokers, they focus more on the smaller businesses. As far as the M and A advisors are concerned, concerned, they work exclusively on larger deals. So it could be lower middle market to upper plus middle market. And those can range anywhere between 5 to 10% of the transaction size. Whereas investment bankers, they certainly work on much larger deal. Again, the.
Success fee could be lower, as low as 1 to 2 or 3%. But there's definitely a minimum retainer or upfront fees involved. At the end of the day, all of these fees are negotiable. I think what is important is finding someone that has the operational experience, they're familiar with your sector and are able to tell a good story about your company when it comes to selling it.