The structures you will encounter
Hourly or day rate. Used for defined analytical work such as model building, valuation reviews or diligence support. Predictable per unit, less predictable in total unless the scope is tight.
Fixed project fee. A set amount for a defined deliverable: a financial model, a positioning workshop, an information memorandum. Easy to compare across providers.
Monthly retainer. A recurring fee for the duration of a mandate. Covers ongoing capacity and signals commitment from both sides.
Success fee. A percentage of transaction value payable on completion. Standard in both fundraising and M&A mandates.
Hybrid. The most common arrangement for full mandates: a modest retainer plus a success fee, with the retainer sometimes credited against the success fee at closing.
Equity or warrants. Occasionally used with early-stage companies. Treat this carefully, since it affects your cap table permanently for a time-limited service.
What drives the number
Transaction size. Percentage rates generally fall as value rises, while absolute fees rise.
Complexity. Cross-border structures, carve-outs, regulated sectors, messy cap tables and earn-outs all add work.
Scope. A full mandate from preparation to closing costs more than negotiation support on a term sheet that already exists.
Seniority and staffing. A partner-led team is priced differently from an associate-led one. Ask who does the work.
Duration and exclusivity. Longer processes and exclusive mandates carry different terms from non-exclusive arrangements.
Expected difficulty. Advisors price risk. A round with a clear story and strong metrics attracts different terms from a turnaround situation.
Read the success fee definition carefully
The percentage matters less than what it applies to. Check:
The fee base. Does transaction value include debt, cash left in the business, earn-out payments, rollover equity, or the value of retained shares? Each inclusion changes the number materially.
Trigger events. Is the fee due on signing or on receipt of funds? What happens if an earn-out never pays?
Minimum fee. Many mandates set a floor regardless of transaction value.
Tail period. If the mandate ends, for how long afterwards is a fee payable on a transaction with a party the advisor introduced, and how is introduced defined?
Termination. What notice is required and what is owed on termination?
These clauses, not the headline percentage, determine your real cost.
Compare mandates, not prices
Two proposals with different fees usually describe different jobs. Before comparing numbers, line up the deliverables: who builds the model, who writes the memorandum, who runs outreach, how many counterparties are covered, who attends meetings, who negotiates, and what happens during diligence.
A cheaper mandate that leaves the memorandum and the target list to you may cost more in management time than it saves in fees.
Negotiable terms
Most mandates have room in the retainer level, the credit of retainer against success fee, the incentive rate above a target valuation, the tail length, the expense cap and the notice period.
An incentive tier is often the most useful thing to negotiate. Paying a higher percentage on value above an agreed threshold costs nothing if the threshold is not reached and aligns the advisor with maximising outcome rather than closing quickly.
Budgeting realistically
Advisor fees are one line in the transaction budget. Also plan for legal counsel, tax advice, any vendor diligence you commission, data room costs and audit or accounting support.
Ask each advisor for an estimate of total external transaction costs in comparable processes they have run. Advisors who have done this recently can give a reasonable range for your size band, and the willingness to discuss the full cost is itself a signal.
This article is general information about how fees are structured, not financial or legal advice on a specific mandate.