Advisory fees live in the engagement letter, and a seller who reads six clauses closely will understand their cost better than one who negotiates the rate. The letter is drafted by the adviser, and everything in it is negotiable before signature and nothing after.
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The six clauses
The retainer and whether it is credited at closing. The success fee scale and how it applies per tranche. The minimum fee. The definition of consideration, which decides whether assumed debt and deferred payments are fee bearing. The tail, its length and which buyers it covers. And the termination right and its notice period.
The definition of consideration
This is the clause sellers read last and regret first. A fee on enterprise value includes debt the buyer assumes; a fee on equity value does not. A fee on an earnout payable at closing means paying for money you may never receive. Ask for fees on deferred amounts to be payable when and if you are paid, and firms will frequently agree.
What to ask for in writing
A worked fee example at three prices, including one below your expectation. Confirmation of what happens to the retainer if you withdraw. A tail limited to buyers actually introduced and listed in writing at termination. And the names of the people who will do the work.
Questions people ask about M&A advisory fees
Are advisory fees published anywhere?
Very rarely. The published US commissions on this site run from 5% to 15% and mostly cover brokerage rather than advisory work.
Is the retainer refundable?
Almost never. Ask instead whether it is credited against the success fee at closing, which many firms accept.
How long should the tail be?
Twelve to twenty four months is common, and the length matters less than which buyers it covers. Introduced buyers only, named in writing.