Investment Bank Fees for Lower-Middle-Market Deals in 2026: What Owners Actually Pay

By Christoph Totter, CT Acquisitions Managing Partner. Last reviewed: July 2026.

Investment bank fees in the lower middle market for 2026 would typically comprise three components: an upfront retainer that would range from a nominal amount to the low six figures, monthly work fees that would either supplement or offset the retainer, and a success fee at closing that would range from low single digits to high single digits of enterprise value for deals sized $10 million to $250 million, per the periodic banker fee surveys published by Firmex and the market data reported by Axial. This guide separates true investment banking fee structures (boutique advisors that would compete with bulge-bracket practices at the low end of their coverage) from business broker fee structures, and clarifies where retainers, minimum fees, Lehman-scale variants, and modified Lehman apply.

Executive summary

Investment bank fees in the lower middle market for 2026 would generally include (1) a retainer or engagement fee, (2) monthly work fees, and (3) a success fee at closing, per the Firmex M&A Fee Guide . Success fees for enterprise values of roughly $10 million to $50 million would commonly follow a modified Lehman formula or a flat percentage with a fixed minimum, as reported in the Firmex banker.

• Investment bank fees in the lower middle market for 2026 would generally include (1) a retainer or engagement fee, (2) monthly work fees, and (3) a success fee at closing, per the Firmex M&A Fee Guide.
• Success fees for enterprise values of roughly $10 million to $50 million would commonly follow a modified Lehman formula or a flat percentage with a fixed minimum, as reported in the Firmex banker survey and by Axial.
• Minimum success fees for smaller LMM transactions would frequently fall between $200,000 and $500,000 to compensate for the fixed workload of a full sell-side process, per Axial’s published banker network data.
• Boutique investment banks that would work in this size band include Houlihan Lokey (NYSE: HLI), Lincoln International, Harris Williams, Brown Gibbons Lang, Livingstone Partners, Capstone Partners, and FOCUS Investment Banking.
• Investment bank scope of work would typically include CIM preparation, buyer outreach, management presentations, LOI negotiation coordination, and definitive agreement negotiation coordination, per Firmex. Legal, quality of earnings, tax structuring, and R&W insurance premium would remain excluded.
• The IBBA Market Pulse reports capture the smaller LMM and Main Street cohort where broker economics differ from boutique investment banking.
• FINRA Rule 2010 and Rule 5110 would apply to registered broker-dealers involved in the sale of securities, distinguishing them from unregistered M&A intermediaries who would rely on the 2014 SEC M&A Broker No-Action Letter as codified by the Consolidated Appropriations Act, 2023 Section 501.

Key findings

Retainers for LMM investment banking engagements would range from a nominal amount waived against success fee at some boutiques to $50,000 to $150,000 for full-service coverage, per the Firmex M&A Fee Guide . Monthly work fees, when charged, would generally range from $5,000 to $25,000 and would typically be credited against the success fee at close, per Axial banker network reporting. Success fees for deals with enterprise values from $10.

1. Retainers for LMM investment banking engagements would range from a nominal amount waived against success fee at some boutiques to $50,000 to $150,000 for full-service coverage, per the Firmex M&A Fee Guide.
2. Monthly work fees, when charged, would generally range from $5,000 to $25,000 and would typically be credited against the success fee at close, per Axial banker network reporting.
3. Success fees for deals with enterprise values from $10 million to $50 million would range from low single digits to high single digits of enterprise value with a fixed dollar minimum, per Firmex.
4. The modified Lehman formula (5-4-3-2-1 or the double Lehman variant of 10-8-6-4-2) would remain a common tiered structure at the boutique level, as published by Axial.
5. Minimum success fees would frequently sit between $200,000 and $500,000 for transactions below $10 million enterprise value to compensate for fixed process workload, per Axial.
6. Bulge-bracket investment banks including Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) would generally decline mandates below $100 million to $250 million enterprise value, ceding the sub-$250M band to boutique practices, per public disclosures from Houlihan Lokey in its 2025 Annual Report.
7. Named LMM boutique investment banks include Houlihan Lokey (NYSE: HLI), Lincoln International, Harris Williams, Brown Gibbons Lang, Livingstone Partners, Capstone Partners, and FOCUS Investment Banking.
8. Investment bank scope of work would generally exclude legal fees, quality-of-earnings expenses charged by KPMG, Deloitte, or independent QoE firms, tax structuring counsel, and representations-and-warranties insurance premium sourced through brokers, per Firmex.
9. The IBBA Market Pulse reports capture business broker economics for deals below approximately $2 million, which differ meaningfully from boutique investment banking pricing.
10. Registered broker-dealers would remain subject to FINRA Rule 5110, while unregistered M&A intermediaries would operate under the framework established by the 2014 SEC M&A Broker No-Action Letter and codified in Section 501 of the Consolidated Appropriations Act, 2023.

Investment bank fees in the lower middle market: definition and scope

Investment bank fees in the lower middle market for 2026 would refer to compensation charged by boutique investment banks and select bulge-bracket LMM groups for full-service sell-side or buy-side representation on transactions with enterprise values ranging from approximately $10 million to $250 million.

Investment bank fees in the lower middle market for 2026 would refer to compensation charged by boutique investment banks and select bulge-bracket LMM groups for full-service sell-side or buy-side representation on transactions with enterprise values ranging from approximately $10 million to $250 million. These fees would differ from business broker commissions charged on Main Street transactions below $2 million enterprise value, and would differ again from private equity advisory retainers charged for portfolio-level engagements.

The distinction matters because pricing conventions, minimum fees, and scope of work would each vary meaningfully across the boutique, bulge-bracket, and broker tiers. The lower middle market cohort has been sized in the PitchBook 2024 Annual US PE Breakdown as the segment where sponsor buyers would remain most active but where deal counts would depend on price expectations, credit conditions, and buyer competition. For a broader treatment of the CT sell-side process across all deal sizes, refer to the CT sell-side investment banking process guide.

Fee components for LMM investment banking

Investment bank fees for LMM engagements in 2026 would typically break into four line items: an engagement retainer, monthly work fees, a success fee, and expense reimbursement. Each component would carry distinct market conventions and negotiation ranges, per the Firmex M&A Fee Guide and the Axial banker network data.

Investment bank fees for LMM engagements in 2026 would typically break into four line items: an engagement retainer, monthly work fees, a success fee, and expense reimbursement. Each component would carry distinct market conventions and negotiation ranges, per the Firmex M&A Fee Guide and the Axial banker network data.

Engagement retainer

The engagement retainer would represent upfront payment received by the investment bank at signing of the engagement letter. Retainers for LMM engagements would range from nominal amounts (some boutiques would waive the retainer entirely, offsetting it against the success fee) to $50,000 to $150,000 for full-scope engagements, per the Firmex M&A Fee Guide. Retainers would compensate the banker for CIM production work performed before any buyer outreach begins. Sellers would sometimes negotiate a full or partial credit of the retainer against the eventual success fee. For a deeper look at retainer conventions, refer to the CT M&A advisor retainer guide.

Monthly work fees

Monthly work fees, when charged, would typically range from $5,000 to $25,000 per month and would run for the duration of the active engagement. These fees would compensate the bank for ongoing buyer outreach, management presentation coordination, and process management. Monthly fees would generally be credited against the success fee at closing, per Axial banker reporting. Some boutiques would not charge monthly work fees at all, opting instead for a slightly higher success fee percentage.

Success fee

The success fee would represent the primary economic incentive for the investment bank and would only be paid at closing. Success fees would range from low single digits to high single digits of enterprise value for LMM deals sized $10 million to $250 million, with the percentage inversely proportional to deal size, per the Firmex M&A Fee Guide. A $10 million enterprise value transaction would carry a higher percentage success fee than a $100 million transaction because the fixed workload of running a sell-side process would remain roughly comparable regardless of deal size. For an owner-side view of the total cost of retaining an advisor, refer to the CT M&A advisor cost guide.

Expense reimbursement

Expense reimbursement would cover travel, printing, data room hosting, and third-party research subscriptions incurred by the banker on behalf of the seller. Expense caps would typically range from $25,000 to $75,000 depending on engagement scope and geography, per the Firmex M&A Fee Guide.

LMM investment bank fee ranges by enterprise value band

The table below would summarize the fee ranges reported by the Firmex M&A Fee Guide and Axial banker network for LMM transactions in 2026. Ranges would reflect published survey data and would not represent a quote from any specific firm. Actual fees would depend on vertical, complexity, buyer universe, and seller preparation. Enterprise value band Retainer range Monthly work fee Success fee range Minimum success fee $5M to $10M $25,000.

The table below would summarize the fee ranges reported by the Firmex M&A Fee Guide and Axial banker network for LMM transactions in 2026. Ranges would reflect published survey data and would not represent a quote from any specific firm. Actual fees would depend on vertical, complexity, buyer universe, and seller preparation.

Enterprise value band	Retainer range	Monthly work fee	Success fee range	Minimum success fee
$5M to $10M	$25,000 to $75,000	$5,000 to $15,000	High single digits to low double digits of EV	$200,000 to $400,000
$10M to $25M	$50,000 to $100,000	$10,000 to $20,000	Mid single digits to high single digits of EV	$300,000 to $500,000
$25M to $50M	$75,000 to $125,000	$15,000 to $25,000	Low single digits to mid single digits of EV	$500,000 to $750,000
$50M to $100M	$100,000 to $150,000	$20,000 to $25,000	Low single digits of EV, tiered	$750,000 to $1,000,000
$100M to $250M	$100,000 to $250,000	Often waived at this size	Low single digits of EV, modified Lehman	$1,000,000+

Source ranges compiled from the Firmex M&A Fee Guide, Axial banker network data, and the IBBA Market Pulse Report. Ranges would represent survey data, not specific firm quotes.

The modified Lehman formula and its variants

The Lehman formula would remain a shorthand for tiered success fee schedules used by LMM investment banks in 2026. The classic Lehman formula would apply 5 percent to the first million of consideration, 4 percent to the second million, 3 percent to the third million, 2 percent to the fourth million, and 1 percent to everything above $4 million. Because the classic formula would produce fees far below current LMM.

The Lehman formula would remain a shorthand for tiered success fee schedules used by LMM investment banks in 2026. The classic Lehman formula would apply 5 percent to the first million of consideration, 4 percent to the second million, 3 percent to the third million, 2 percent to the fourth million, and 1 percent to everything above $4 million. Because the classic formula would produce fees far below current LMM economics, most banks would instead use a modified Lehman or a double Lehman variant, per Axial.

Double Lehman formula

The double Lehman would apply 10 percent to the first million, 8 percent to the second million, 6 percent to the third million, 4 percent to the fourth million, and 2 percent to everything above $4 million. On a $10 million enterprise value transaction, the double Lehman would produce a success fee of $400,000 (or 4 percent of EV). This would frequently be paired with a minimum success fee floor of $200,000 to $500,000 to protect against smaller-than-expected outcomes, per Axial.

Tiered percentage with breakpoints

Many boutiques would use a tiered percentage structure with breakpoints tied to specific dollar thresholds. A typical structure would apply a higher percentage to the base enterprise value up to a threshold, then a lower percentage to any consideration above that threshold, with a further reduced percentage above a second threshold. This structure would align the bank’s incentive to push past specific price targets, per the Firmex M&A Fee Guide.

Flat percentage with minimum

Some boutiques would prefer a flat percentage of the transaction value with a fixed dollar minimum. A structure of “the greater of X percent of consideration or $Y” would remain common at the smaller end of the LMM (deals below $25 million enterprise value), where the fixed workload would dominate the pricing calculus, per Axial.

What moves the LMM investment bank fee

Investment bank fees for LMM deals in 2026 would vary based on ten primary drivers, ranked here in approximate order of impact on the negotiated fee. Transaction size. Smaller transactions would command higher percentage fees due to the fixed workload of running a sell-side process. A $10 million EV deal and a $100 million EV deal would require roughly the same volume of CIM production, buyer outreach, and management presentations.

Investment bank fees for LMM deals in 2026 would vary based on ten primary drivers, ranked here in approximate order of impact on the negotiated fee.

1. Transaction size. Smaller transactions would command higher percentage fees due to the fixed workload of running a sell-side process. A $10 million EV deal and a $100 million EV deal would require roughly the same volume of CIM production, buyer outreach, and management presentations. This is the dominant driver.
2. Vertical complexity. Regulated industries (healthcare, financial services, defense, food and beverage) and cross-border transactions would command higher fees due to the additional buyer diligence and structuring work required. For healthcare vertical context, see the CT dermatology M&A multiples guide.
3. Buyer universe breadth. A broad buyer universe requiring outreach to 100 or more parties would command a higher work fee than a targeted process to five to ten pre-identified buyers. Broad processes would generally produce better price outcomes but would cost more to run.
4. Seller preparation. A prepared seller with clean financials, a CIM-ready data set, and quality of earnings work already completed would command lower fees than an unprepared seller requiring extensive prep work by the bank.
5. Deal structure complexity. Carve-outs, roll-ups, joint ventures, and non-standard structures (earnouts, seller financing, rollover equity) would command higher fees than clean cash sales.
6. Retainer credit structure. Banks that would waive retainers or credit monthly fees against the success fee would generally charge a slightly higher headline success fee percentage.
7. Minimum success fee floor. The presence and magnitude of a minimum success fee would materially affect the effective fee rate on smaller transactions.
8. Exclusivity and tail period. Longer tail periods (12 to 24 months) and stricter exclusivity provisions would sometimes come with fee concessions on the headline success fee.
9. Multiple advisors on retainer. Owners running dual-track processes (IPO plus sale, or auction plus targeted outreach) would face additional fee complexity.
10. Reputation and league table position. Higher-ranked bulge-bracket and boutique practices would generally command premium fees due to signaling value and their institutional buyer relationships.

Boutique LMM investment banks specializing in this segment

The LMM investment banking segment for 2026 would remain served by a group of publicly and privately held boutique investment banks that would specialize in the $10 million to $250 million enterprise value band. The following firms would represent named participants in this segment, described neutrally with reference to their published coverage.

The LMM investment banking segment for 2026 would remain served by a group of publicly and privately held boutique investment banks that would specialize in the $10 million to $250 million enterprise value band. The following firms would represent named participants in this segment, described neutrally with reference to their published coverage.

Houlihan Lokey (NYSE: HLI)

Houlihan Lokey would remain one of the largest boutique investment banks with LMM coverage, per its 2025 Annual Report. Its Corporate Finance group would cover middle-market M&A transactions, and its Financial Sponsors coverage would emphasize private equity relationships. Houlihan would generally cover the higher end of the LMM band, with deal sizes commonly ranging from $50 million to $500 million enterprise value.

Lincoln International

Lincoln International would remain a global mid-market investment bank with dedicated LMM coverage, publishing periodic Lincoln Middle Market Index reports covering mid-market M&A activity. Lincoln would typically cover transactions from $25 million to $500 million enterprise value.

Harris Williams

Harris Williams, a subsidiary of PNC Financial Services (NYSE: PNC), would remain a middle-market investment bank with strong sponsor coverage. Harris Williams would generally focus on the higher end of the LMM through the core middle market, with deal sizes commonly ranging from $50 million to $500 million enterprise value.

Brown Gibbons Lang

Brown Gibbons Lang would remain a private middle-market investment bank with sector coverage across industrials, consumer, business services, and healthcare. BGL would generally cover the LMM through the core middle market band.

Livingstone Partners

Livingstone Partners would remain a private international mid-market M&A firm with sector-focused practices. Livingstone would generally cover deals in the $25 million to $250 million enterprise value range.

Capstone Partners

Capstone Partners, part of Huntington National Bank, would remain a middle-market investment bank with LMM sell-side coverage across multiple sectors. Capstone would generally cover transactions in the $10 million to $250 million enterprise value range.

FOCUS Investment Banking

FOCUS Investment Banking would remain a national middle-market investment bank with LMM coverage. FOCUS would generally focus on the lower end of the LMM, with deals commonly ranging from $5 million to $150 million enterprise value.

CT Acquisitions positioning

CT Acquisitions would represent another lower-middle-market option specializing in the $1 million to $50 million enterprise value band, with owner-aligned fee structures and a curated network of institutional buyers. CT would remain positioned in the smaller end of the LMM, where owners would frequently benefit from a specialist practitioner rather than a full-service bulge-bracket boutique. For a broader look at the CT sell-side advisory offering, refer to the CT M&A advisory hub. For sister-vertical M&A advisor coverage, refer to the CT manufacturing M&A advisor page and the CT SaaS M&A advisor page.

Bulge-bracket vs boutique LMM: where the line sits

Bulge-bracket investment banks including Goldman Sachs (NYSE: GS) , Morgan Stanley (NYSE: MS) , JPMorgan (NYSE: JPM) , and Bank of America (NYSE: BAC) would generally decline LMM mandates below $100 million to $250 million enterprise value, ceding the segment to boutique practices.

Bulge-bracket investment banks including Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), JPMorgan (NYSE: JPM), and Bank of America (NYSE: BAC) would generally decline LMM mandates below $100 million to $250 million enterprise value, ceding the segment to boutique practices. The economics of running a bulge-bracket sell-side process would not scale down efficiently to the LMM band, per public disclosures from Houlihan Lokey in its 2025 Annual Report.

Certain bulge-bracket banks would maintain dedicated middle-market or LMM groups, but these groups would typically focus on the upper end of the LMM (deals above $100 million enterprise value) rather than the sub-$50 million cohort where owner-operator sellers would predominate. This structural gap would create the boutique LMM opportunity that firms like Houlihan Lokey, Lincoln International, and Harris Williams would fill at the upper end, and firms like CT Acquisitions would fill at the lower end.

Business broker vs LMM investment bank: pricing differences

Business brokers would price differently from LMM investment banks. Broker pricing on Main Street transactions (deals below $2 million enterprise value) would commonly follow a flat percentage of transaction value ranging from 10 percent to 15 percent, with a minimum commission of $10,000 to $25,000, per the IBBA Market Pulse Report . Broker economics would rely on transaction volume and shorter engagement cycles, while investment bank economics would rely on.

Business brokers would price differently from LMM investment banks. Broker pricing on Main Street transactions (deals below $2 million enterprise value) would commonly follow a flat percentage of transaction value ranging from 10 percent to 15 percent, with a minimum commission of $10,000 to $25,000, per the IBBA Market Pulse Report. Broker economics would rely on transaction volume and shorter engagement cycles, while investment bank economics would rely on transaction size and the intensity of a curated sell-side process. For a direct comparison of the two structures, refer to the CT M&A advisor vs business broker guide.

The transition between broker economics and investment bank economics would generally occur in the $2 million to $10 million enterprise value band. In this range, both broker-style flat percentages and modified investment banking success fee structures would appear in engagement letters. Above $10 million enterprise value, investment banking pricing conventions would generally dominate. For the full CT view on advisor fee structures, see the CT M&A advisor fee structure guide and the CT 2026 M&A advisor fees guide.

What the investment bank fee includes and excludes

Investment bank fees for LMM engagements in 2026 would generally cover a specific scope of work, with several material categories of expense remaining excluded and paid directly by the seller. The following table would summarize the scope inclusions and exclusions typical of a full-service LMM sell-side engagement, per the Firmex M&A Fee Guide . Included in investment bank fee Excluded (paid separately by seller) Confidential information memorandum (CIM) preparation Legal.

Investment bank fees for LMM engagements in 2026 would generally cover a specific scope of work, with several material categories of expense remaining excluded and paid directly by the seller. The following table would summarize the scope inclusions and exclusions typical of a full-service LMM sell-side engagement, per the Firmex M&A Fee Guide.

Included in investment bank fee	Excluded (paid separately by seller)
Confidential information memorandum (CIM) preparation	Legal fees for M&A counsel
Buyer universe research and outreach	Quality of earnings report (QoE)
Management presentation coordination	Tax structuring advice from CPA firm
Data room setup and management	Representations and warranties insurance premium
Bid evaluation and LOI negotiation coordination	Environmental site assessments
Definitive agreement negotiation coordination	Regulatory filings (HSR, CFIUS)
Financial modeling and valuation analysis	Insurance broker fees
Weekly seller status reporting	Working capital true-up accounting

Legal fees for M&A counsel would generally range from $150,000 to $750,000+ for LMM transactions depending on complexity, per published fee benchmarks. Quality of earnings work would generally range from $50,000 to $150,000 per the seller-side QoE firms in the market. For a seller-side view of the QoE process, refer to the CT quality of earnings report deep dive.

How the LMM sell-side process runs month by month

The LMM sell-side process for 2026 would typically run six to nine months from engagement to closing. The month-by-month cadence below would represent the standard progression at a boutique investment bank, per the Firmex M&A Fee Guide and standard practice at named LMM boutiques.

The LMM sell-side process for 2026 would typically run six to nine months from engagement to closing. The month-by-month cadence below would represent the standard progression at a boutique investment bank, per the Firmex M&A Fee Guide and standard practice at named LMM boutiques.

Month 1: Engagement, prep, and CIM production

The engagement letter would be signed. The seller would provide historical financials, tax returns, customer data, and operational context. The bank would build the financial model, draft the CIM, and prepare the teaser and management presentation. Retainer and first monthly work fee would be due.

Month 2: Buyer identification and initial outreach

The bank would finalize the buyer universe and begin outreach with the teaser under NDA. The bank would coordinate NDA execution across interested parties. The CIM would be shared with buyers who executed the NDA.

Month 3: CIM distribution and IOI collection

Interested buyers would review the CIM and submit indications of interest (IOIs) by a stated deadline. The bank would evaluate IOIs on price, structure, buyer fit, certainty of close, and timing. The seller would review the IOI dashboard and shortlist buyers for the management presentation round.

Month 4: Management presentations and data room access

The shortlisted buyers would receive access to the full data room and would conduct management presentations with the seller and management team. The bank would coordinate follow-up diligence and would field buyer questions.

Month 5: LOI collection and selection

Buyers would submit letters of intent by a stated deadline. The bank would evaluate the LOIs on price, structure, financing certainty, exclusivity terms, and timing. The seller would select the winning LOI and sign exclusivity. For seller-side LOI review guidance, refer to the CT letter of intent template.

Months 6 to 9: Exclusive diligence, definitive agreement, closing

The winning buyer would conduct confirmatory diligence during the exclusivity period. Legal counsel would draft the definitive agreement (asset purchase agreement or stock purchase agreement, plus escrow agreement, employment agreements, non-competes, and lease assignments). The QoE would be finalized and reviewed. The transaction would close on schedule if diligence surfaces no material issues. The success fee would be due at closing. For seller-side diligence preparation, refer to the CT due diligence checklist.

Regulatory and structural mechanics for 2026

The regulatory framework for LMM investment banking in 2026 would rest on two foundations: the FINRA Rule 5110 and related rules governing registered broker-dealers, and the 2014 SEC M&A Broker No-Action Letter that would permit unregistered M&A intermediaries to receive success fees on private company transfers under specified conditions.

The regulatory framework for LMM investment banking in 2026 would rest on two foundations: the FINRA Rule 5110 and related rules governing registered broker-dealers, and the 2014 SEC M&A Broker No-Action Letter that would permit unregistered M&A intermediaries to receive success fees on private company transfers under specified conditions.

Registered broker-dealer status

An investment bank that would sell securities of a private company (such as stock in a stock purchase agreement) would generally be required to register with the SEC as a broker-dealer and be a member of FINRA. Registered broker-dealers would remain subject to FINRA Rule 2010 (standards of commercial honor) and FINRA Rule 5110 (governing compensation in public offerings and, by extension, industry practices in private M&A). Most named LMM boutiques would maintain broker-dealer registration.

Unregistered M&A intermediary framework

Section 501 of the Consolidated Appropriations Act, 2023 would provide a statutory exemption from broker-dealer registration for M&A brokers meeting specified conditions. This framework would codify the 2014 SEC M&A Broker No-Action Letter and would allow small business M&A intermediaries to earn success fees on qualifying transactions without full broker-dealer registration. The exemption would apply to privately-held business transactions below specific revenue and earnings thresholds.

State securities law considerations

State-level securities regulators including NASAA members would sometimes impose additional registration or notification requirements on M&A intermediaries operating within their jurisdictions. Sellers would confirm the licensing status of any bank or intermediary against state records before signing an engagement letter.

Antitrust and CFIUS review

Transactions above Hart-Scott-Rodino thresholds would require pre-merger notification to the FTC’s Premerger Notification Program and the DOJ Antitrust Division. Transactions involving foreign buyers or sensitive US technologies would require review by the Committee on Foreign Investment in the United States (CFIUS). These regulatory reviews would remain excluded from investment bank fees and would be handled by seller-side counsel.

How to choose an LMM investment bank

Sellers considering an LMM investment banking engagement in 2026 would evaluate candidates against the following ten-point checklist, drawn from CT engagement experience and consistent with published banker fee guidance from Firmex and Axial . Broker-dealer registration status. Confirm FINRA registration for engagements involving stock sales. Verify the firm’s BrokerCheck record. Deal size fit. Confirm the bank’s typical enterprise value range aligns with your deal. A bank that would normally do.

Sellers considering an LMM investment banking engagement in 2026 would evaluate candidates against the following ten-point checklist, drawn from CT engagement experience and consistent with published banker fee guidance from Firmex and Axial.

1. Broker-dealer registration status. Confirm FINRA registration for engagements involving stock sales. Verify the firm’s BrokerCheck record.
2. Deal size fit. Confirm the bank’s typical enterprise value range aligns with your deal. A bank that would normally do $200 million deals would not be a fit for a $15 million deal, and vice versa.
3. Vertical experience. Verify the bank has completed at least three to five closed transactions in your vertical over the past three years. Ask for a redacted deal list.
4. Buyer relationships. Assess the bank’s private equity, family office, and strategic buyer coverage. Ask how many buyers they would plan to include in your process.
5. Fee structure transparency. Ensure the engagement letter clearly lays out retainer, monthly fees, success fee schedule, minimum success fee, tail period, and expense reimbursement caps.
6. Team assignment. Identify the senior banker who would run your deal day-to-day. Avoid firms where a senior banker would win the pitch and hand off execution to junior team members.
7. References from prior sellers. Ask for two to three references from owners who sold in your enterprise value band in the past twelve to twenty-four months.
8. Conflicts and exclusivity. Confirm the bank does not represent competitive buyers that would sit on your buyer list. Confirm the exclusivity and tail terms in the engagement letter.
9. Retainer credit and offset structure. Understand whether retainer and monthly fees would credit against the success fee, and how the credit would be calculated.
10. Cultural fit and seller alignment. Meet with the senior banker in person or by video. Judge whether the banker would represent your interests aggressively or would default to closing the fastest deal.

For a broader treatment of the sell-side advisor selection process, refer to the CT sell-side advisory guide. For a comparison with buyer-side engagement, refer to the CT buy-side M&A engagement guide.

Frequently asked questions

What is a typical retainer for an LMM investment banking engagement in 2026?

Retainers for LMM investment banking engagements in 2026 would range from a nominal amount waived against the success fee at some boutiques to $50,000 to $150,000 at full-service coverage banks, per the Firmex M&A Fee Guide. Retainers would typically be credited (in full or in part) against the success fee at closing.

How high are LMM investment bank success fees for a $25 million enterprise value deal?

Success fees for a $25 million enterprise value deal in 2026 would generally range from mid single digits to high single digits of enterprise value, per the Firmex M&A Fee Guide. A minimum success fee floor of $300,000 to $500,000 would typically apply. Actual fees would depend on vertical, buyer universe breadth, and engagement scope.

Do bulge-bracket banks do LMM deals below $50 million?

Bulge-bracket banks including Goldman Sachs and Morgan Stanley would generally decline mandates below $100 million to $250 million enterprise value, per public disclosures. The LMM band below $50 million would remain served by boutique investment banks such as Houlihan Lokey, Capstone Partners, and FOCUS Investment Banking.

What is the difference between a modified Lehman fee and a flat percentage success fee?

A modified Lehman fee would apply tiered percentages to bands of transaction value (for example, 10-8-6-4-2 percent across the first four million and above), while a flat percentage fee would apply a single percentage to the full transaction value. Modified Lehman would produce higher effective fees on smaller transactions, while flat percentage would produce simpler math on larger deals, per Axial.

Are investment bank fees negotiable?

Investment bank fees for LMM engagements would remain negotiable across all four components (retainer, monthly work fees, success fee percentage, minimum success fee floor). Sellers with clean data rooms, quality of earnings already completed, and clear buyer visibility would generally command more favorable terms than unprepared sellers, per the Firmex M&A Fee Guide.

What does an LMM investment bank fee not cover?

Investment bank fees would generally not cover legal fees for M&A counsel, quality-of-earnings expenses, tax structuring advice, representations-and-warranties insurance premium, environmental assessments, or HSR/CFIUS regulatory filings, per the Firmex M&A Fee Guide. Sellers would budget separately for these third-party expenses.

How long does an LMM sell-side process take?

An LMM sell-side process would typically run six to nine months from engagement letter signing to closing, per standard practice at named LMM boutiques and the Firmex M&A Fee Guide. Prep work would consume months one to two, buyer outreach and IOIs would run through months three to four, LOIs and exclusivity would run through month five, and confirmatory diligence and closing would run through months six to nine.

Do investment bank fees include success fee tail periods?

Most LMM investment banking engagement letters would include a tail period ranging from 12 to 24 months after termination during which the bank would still be entitled to a success fee if the seller closed with a buyer contacted during the engagement, per the Firmex M&A Fee Guide. Tail terms would remain negotiable and would typically require the bank to maintain a written buyer contact list.

Methodology and data sources

This guide compiles fee range data from the Firmex M&A Fee Guide , the Axial banker network , and the IBBA Market Pulse Report . Named investment bank descriptions draw from public filings including the Houlihan Lokey 2025 Annual Report , the Lincoln Middle Market Index , and each firm’s own published website. Regulatory framework references draw from FINRA Rule 2010 , FINRA Rule 5110 , the 2014 SEC M&A.

This guide compiles fee range data from the Firmex M&A Fee Guide, the Axial banker network, and the IBBA Market Pulse Report. Named investment bank descriptions draw from public filings including the Houlihan Lokey 2025 Annual Report, the Lincoln Middle Market Index, and each firm’s own published website. Regulatory framework references draw from FINRA Rule 2010, FINRA Rule 5110, the 2014 SEC M&A Broker No-Action Letter, and Section 501 of the Consolidated Appropriations Act, 2023. Broader private equity market context draws from the PitchBook 2024 Annual US PE Breakdown.

Fee ranges reported in this guide would represent survey data and published market conventions, not quotes from specific firms. Actual fees would depend on vertical, deal size, buyer universe breadth, seller preparation, and engagement scope. All private-company fee data would remain conditional and subject to negotiation between seller and bank on a deal-by-deal basis.

Disclaimer. This guide is not an appraisal, not investment advice, not legal advice, not tax advice, not financial advice, and not a prediction of any specific transaction outcome. Sellers considering an LMM sell-side engagement would consult independent legal, tax, and financial counsel before signing any engagement letter or definitive agreement. Referenced firms and datasets are cited for informational purposes only and their inclusion would not constitute endorsement.