Capped Success Fee M&A Advisor: How It Works

A capped success fee limits what a seller pays as deal value rises. Instead of an uncapped percentage that keeps increasing with enterprise value, the advisor’s fee stops at a stated maximum. Lyndon Advisory charges 2% of enterprise value, capped at US$300,000, with no retainer, monthly fee, or expense recharge.

For sellers, the cap matters because the real question is net proceeds after advisor fees, transaction expenses, debt, escrows, and tax.

How Lyndon’s Cap Works

Enterprise value	Lyndon fee	Effective rate
US$5M	US$100,000	2.00%
US$10M	US$200,000	2.00%
US$15M	US$300,000	2.00%
US$25M	US$300,000	1.20%
US$50M	US$300,000	0.60%
US$100M	US$300,000	0.30%

This is a cap, not a minimum. If the enterprise value is below US$15 million, the fee is 2% of the completed transaction value. Above that level, the maximum Lyndon Advisory fee remains US$300,000.

Capped Fee vs Uncapped Fee

Fee structure	Seller impact
Uncapped 3% success fee	Cost rises dollar-for-dollar with valuation
Modified Lehman formula	May produce high dollar fees at mid-market deal sizes
Percentage plus retainer	Seller pays before closing and again at closing unless credited
Capped success fee	Seller knows maximum advisory cost before launching
Capped fee with no retainer	Maximum cost is known and only paid if the deal completes

Corporate Finance Institute’s Lehman Formula overview explains how tiered investment-banking fees can be calculated. Sellers should convert any formula into actual dollars at likely deal values before comparing advisors.

Why the Cap Supports Net Proceeds

The highest headline offer is not the same as the seller’s take-home outcome. A seller should compare:

• advisory fee;
• legal, tax, accounting, and data-room costs;
• debt repayment;
• working capital adjustment;
• escrow or holdback;
• tax leakage; and
• timing or earnout risk.

The SBA business valuation guide frames valuation around financial condition, assets, and market evidence. A seller should apply the same discipline to costs: model the actual waterfall rather than relying on a fee percentage alone.

“The cap is important because it makes the economics legible before the seller commits. If a US$50 million transaction pays the same advisory fee as a US$25 million transaction, the seller keeps more of the upside created by the process.”

— Daniel Bae, Founder & CEO, Lyndon Advisory

What a Cap Does Not Solve

A fee cap is not enough by itself. Sellers still need to check whether the advisor can run a real process.

Question	Why it matters
Is there still a retainer?	A capped success fee can still be paired with pre-closing fees
Are expenses recharged?	Uncapped expenses can weaken a clear fee cap
Is the cap on enterprise value or equity value?	Fee basis affects actual dollars
What work is included?	Cheap capped fees are poor value if outreach is passive
Who approves buyer disclosure?	Fee clarity does not replace confidentiality control

For the full seller framework, read the Selling a Business Guide, M&A Advisory Fees, Transparent M&A Advisor Fees, and No-Retainer M&A Advisor.

Practical Next Step

Situation	Best next step
You want to model the cap	Use the fee calculator
You want Lyndon’s full terms	Review Lyndon fees
You want a sale-process view	Submit a confidential valuation inquiry