A fee cap and a minimum fee work in opposite directions. A fee cap limits what the seller pays as transaction value rises. A minimum fee creates a floor below which the advisor’s fee will not fall. Sellers should understand both before signing an engagement letter.
Lyndon Advisory charges 2.5% of enterprise value, capped at US$750,000, with no retainer, monthly fee, or expense recharge. For the broader owner path, read Lyndon’s selling a business guide before comparing fee mechanics in isolation.
Fee Cap vs Minimum Fee
| Term | What it does | Who it protects most |
|---|---|---|
| Fee cap | Sets maximum advisory fee | Seller |
| Minimum fee | Sets minimum advisory fee | Advisor |
| Retainer | Pays advisor before closing | Advisor cash flow |
| Expense recharge | Passes process costs to seller | Advisor margin |
| Closing-only trigger | Fee due only at completion | Seller alignment |
Axial’s 2025-2026 M&A Fee Guide discusses minimum fees, retainers, success-fee formulas, and expense policies across lower-middle-market mandates. The same headline percentage can produce very different outcomes depending on caps and minimums.
Why the Difference Matters
| Enterprise value | 2.5% uncapped | 2.5% capped at US$750,000 | Effective capped rate |
|---|---|---|---|
| US$10M | US$250,000 | US$250,000 | 2.50% |
| US$15M | US$375,000 | US$375,000 | 2.50% |
| US$25M | US$625,000 | US$625,000 | 2.50% |
| US$50M | US$1,250,000 | US$750,000 | 1.50% |
| US$100M | US$2,500,000 | US$750,000 | 0.75% |
The cap becomes more valuable as transaction size increases. A minimum fee has the opposite effect: it matters most when the transaction size is smaller and the formula would otherwise produce a lower dollar amount.
CFI’s Lehman Formula overview explains how tiered success fees can be calculated. Whether the formula is flat, tiered, capped, or subject to a minimum, the seller should translate it into expected dollars.
“A fee cap makes the economics legible for the seller. A minimum fee may be commercially reasonable in some mandates, but it should never be hidden inside a percentage discussion.”
— Daniel Bae, Founder & CEO, Lyndon Advisory
Seller Checklist
Before signing, ask:
- Is there a stated maximum fee?
- Is there a minimum fee?
- Is the fee calculated on enterprise value or equity value?
- Is any retainer credited against the success fee?
- Are expenses recharged?
- Is the success fee payable only at closing?
- Does the tail clause apply only to named, substantively contacted buyers?
For related pages, read Capped Success Fee M&A Advisor, Compare M&A Advisor Fee Proposals, and M&A Advisor Fees and Seller Net Proceeds.
Practical Next Step
| Situation | Best next step |
|---|---|
| You have a minimum-fee proposal | Model the fee impact |
| You want Lyndon’s capped structure | Review Lyndon fees |
| You want a sale-process view | Submit a confidential valuation inquiry |
About the Author
Daniel Bae
Co-founder & CEO, Lyndon Advisory
Daniel is an investment banker with 15+ years of experience in M&A, having advised on deals worth over US$30 billion. His career spans Citi, Moelis, Nomura, and ANZ across London, Hong Kong, and Sydney. He holds a combined Commerce/Law degree from the University of New South Wales. Daniel founded Lyndon Advisory to solve the pain points in M&A, enabling bankers to focus on what matters most — delivering trusted advice to clients.
About Lyndon Advisory
Lyndon Advisory is an M&A advisory firm built for Asia Pacific. We help business owners sell their companies and investors make strategic acquisitions with senior-led execution, disciplined process management, and structured buyer research. For owners, the first step is a confidential review of valuation range, likely buyer universe, and whether a structured sell-side process is justified.
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