Retainer

A retainer is an upfront fee paid to an M&A advisor or business broker at the start of an engagement, before any transaction closes. Retainers compensate the advisor for initial work — business preparation, valuation analysis, marketing materials, and buyer outreach — and signal the seller's commitment to the sale process.

In business brokerage (transactions under $5 million), most brokers work on a commission-only basis with no upfront retainer. In mid-market M&A advisory (transactions above $5 million), a retainer is standard — typically ranging from $10,000 to $100,000 depending on deal size and scope — and is usually credited against the success fee at closing.

A retainer also functions as a pre-qualification mechanism: sellers who pay a retainer have made a financial commitment that signals seriousness, which motivates advisors to invest time in the engagement. An advisor willing to work without any retainer or minimum fee on a large transaction may signal a lack of confidence in the deal's completeness.

See also: Success Fee, Lehman Formula, M&A Advisor, Business Broker, Engagement Letter.