What is a retainer fee for an M&A advisor and is it refundable?
A retainer fee compensates an M&A advisor for engagement work before a deal closes. In a 2024–25 survey of 456 middle-market advisors (about half in North America), the most common monthly work fee was $5,000 to $10,000, and the most common fixed engagement fee was also $5,000 to $10,000 (Firmex, Global M&A Fee Guide 2024-25). Most retainers are non-refundable, and many are creditable against the success fee at closing: they reduce your final fee if the deal closes and are kept by the advisor if it does not.
What a retainer fee is and why advisors charge it
A retainer typically covers the advisor's initial work: business valuation, preparing the information memorandum, developing marketing materials, and establishing the engagement framework.
Retainers also serve as a qualification mechanism. Advisors use them to ensure seller commitment and filter out prospects who may not be serious about completing a sale.
Typical retainer amounts in Canada
In the Firmex survey, the most common monthly and fixed fees were both $5,000 to $10,000, but higher amounts are not unusual: 16% of monthly-fee firms charged $16,000 or more a month, and 38% of fixed-fee firms charged more than $26,000 (Firmex, Global M&A Fee Guide 2024-25).
Some advisors instead charge a one-time engagement fee at signing rather than a recurring monthly fee; in the survey, 28% of firms charged fixed fees and 30% monthly fees (Firmex, Global M&A Fee Guide 2024-25). Both cover similar preparatory work (valuation, information memorandum, marketing materials), but the one-time fee front-loads the cost while the monthly structure distributes it across the engagement.
Business brokers handling smaller transactions usually rely mainly on the commission at closing, though some charge an upfront fee that is applied against it (IBBA, Your Guide to the Business Brokerage Profession, 2021).
Whether retainers are refundable or creditable
Most M&A advisor retainers are non-refundable but creditable against the success fee at closing. If the deal closes, the retainer amount is deducted from the final commission you owe. If the deal does not close, the advisor keeps the retainer regardless of the reason for transaction failure.
Some advisors structure retainers as fully non-refundable and non-creditable, treating them as separate compensation for preliminary work regardless of transaction outcome. A smaller number offer tiered retainer structures where portions are due at specific milestones (completion of valuation, receipt of a letter of intent).
The refundability and creditability of retainers is always negotiable and should be explicitly stated in the engagement letter before you sign.
How retainers differ from success fees
Retainers are distinct from success fees, which are the commission the advisor earns on the final sale price. The most common success fees in the same survey were 4.8% on a $5 million deal, 3.4% on a $20 million deal and 2.0% on a $100 million deal, with North American fees somewhat higher than these global figures (Firmex, Global M&A Fee Guide 2024-25). The retainer is paid upfront; the success fee is paid at closing. If your retainer is creditable, it reduces the success fee owed — but it does not replace it.
When you might negotiate retainer terms
Sellers with highly marketable businesses or multiple competing advisor proposals may have leverage to negotiate better retainer terms. This could mean a lower upfront amount, full creditability against the success fee, or tiered payment schedules tied to milestones rather than a single upfront charge.
Before engaging an advisor, clarify in writing whether the retainer is refundable, creditable, or neither — and under what conditions.
This article is for informational purposes only and does not constitute financial, legal, or business advice. Every business sale is different. Before making decisions about engaging an advisor or agreeing to fee structures, consult a qualified professional familiar with your specific situation.
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