What Does a Business Broker Actually Cost? The Real Numbers for a $2M–$5M Sale

If you're thinking about selling your business, the cost of using a broker is probably not the first thing on your mind. It should be. On a $3 million sale, a standard broker commission can exceed $200,000. On a $5 million sale, it can comfortably reach $300,000 or more. These are not small numbers, and they're often the least understood cost in the entire transaction.

This isn't a broker-bashing exercise. Business brokers provide real services, and for the right type of business, they're the right choice. But the fee structure, the conflict of interest it creates, and the gap between what sellers expect and what they receive are worth understanding clearly before you sign a mandate.

How broker commissions actually work

Business brokers in Australia typically charge a commission calculated as a percentage of the final sale price. Unlike real estate agents, who operate in a market with heavy fee competition and public benchmarks,business brokers operate in relative opacity. Few publish their rates, and rates vary significantly depending on the broker, the business size, and the negotiated terms.

For SME businesses in the $1M–$5M sale price range, the typical commission structure looks like this:

• 5–10% of sale price for businesses selling under $2M. The smaller the deal, the higher the percentage, because fixed costs don't scale down proportionally.
• 6–8% of sale price is the most common band for businesses in the $2M–$5M range.
• Modified Lehman formula for larger transactions: 10% of the first $1M, 8% of the second $1M, 6% of the remainder. This produces a blended rate that declines as price increases. Note that this is a broker-specific adaptation. The traditional Lehman formula used in investment banking is a lower-rate structure (5/4/3/2/1%) designed for much larger transactions. The broker version produces materially higher fees on SME-sized deals.

Some brokers also charge an upfront marketing fee or retainer, typically $2,000–$20,000 depending on the business size and what's included. This covers listing preparation, information memorandum writing, photography, and platform fees. Importantly, this fee is usually non-refundable regardless of whether the business sells.

The real numbers: what you pay on a $2M, $3M, and $5M sale

Here's what broker fees look like in practical dollar terms at three common sale price points.

Sale price	Commission rate	Commission $	Upfront marketing	Total broker cost
$2,000,000	8%	$160,000	~$5,000	~$165,000
$3,000,000	7%	$210,000	~$10,000	~$220,000
$5,000,000	Modified Lehman: 10/8/6%	~$360,000	~$15,000	~$375,000

For the $5M example using a modified Lehman formula: 10% on the first $1M ($100,000) + 8% on the second $1M ($80,000) + 6% on the remaining $3M ($180,000) = $360,000 at a blended rate of approximately 7.2%. Some brokers apply a more conservative scale, always confirm the exact formula in the mandate before signing.

A note on GST: Broker commissions in Australia are subject to GST. The figures in the table above are exclusive of GST, add 10% to each to arrive at the total amount you will actually pay. On a $3M sale at 7%, that means the $210,000 commission becomes $231,000 including GST. This is frequently not highlighted at the time of mandate signing.

On top of these costs, you'll also pay your solicitor for the transaction (typically $15,000–$40,000 for an SME deal), your accountant for financial preparation and tax structuring, and any due diligence costs required. The full cost picture of selling a business is broader than the broker commission alone, but the broker commission is usually the largest single line item before tax. Learn more about other hidden costs of selling.

What you actually get for that money

A business broker earns their commission by connecting sellers with buyers and managing the process through to settlement. In practice, what you're paying for includes the following. Learn more about typical sale timeframes.

Access to a buyer database

Established brokers maintain databases of buyers who have previously expressed interest in acquisitions, individuals registered as looking, PE funds they've dealt with before, and industry buyers who've flagged interest. The quality and size of this database varies enormously between brokers. A large national firm may have genuine reach; a smaller boutique may have a narrower pool.

Critically, buyer databases age. A buyer who registered two years ago may have already purchased a business, changed their criteria, or lost their financing capacity. Database size is not the same as database quality.

Listing and marketing

Brokers list businesses on platforms like BizBuySell, BusinessSale.com.au, and their own websites. They typically prepare an information memorandum (IM), a document summarising the business, its financials, and the opportunity,that goes to qualified buyers under NDA. They handle inbound enquiry, screen callers, and manage the initial stages of buyer qualification.

This is real work, and for a business that needs broad market exposure to find the right buyer, it has genuine value.

Negotiation support and process management

A good broker manages the offer and negotiation process, works to keep deals alive when they wobble during due diligence, and coordinates between lawyers and accountants through to settlement. The value here depends almost entirely on the individual broker's skill and experience. A senior broker who's done 50+ transactions at your deal size can add real value in this role. A junior associate managing a caseload of 30 listings less so.

Settlement coordination

Brokers typically assist with the mechanics of settlement, liaising between parties, tracking conditions precedent, and making sure the transaction reaches completion. This is administrative but important, and experienced brokers are good at it.

What you often don't get

Here's where the honest conversation gets more complicated. There are several things that sellers often assume they're getting from a broker that they're typically not.

An independent valuation

Most brokers provide an indicative price range as part of their listing pitch. This is not an independent valuation. It's a number designed to win your mandate. Brokers who quote high get more listings; brokers who quote accurately and conservatively lose mandates to competitors who promise more. This creates a structural pressure toward optimistic appraisals.

An independent valuation (one conducted by someone with no financial interest in whether you list or what price you list at) is a different thing. Understanding what your business is actually worth before you engage a broker gives you a benchmark to evaluate the broker's appraisal against, and protects you from listing at an unrealistic price that sits on the market for 18 months.

Pre-sale preparation and value improvement

Brokers are transaction intermediaries, not preparation specialists. Their job is to sell the business as it is, not to spend six to twelve months helping you improve it. Reducing owner dependency, cleaning up financials, building management depth, diversifying the customer base,all the things that materially improve your multiple and your sale price, are not part of a broker's service model.

If you're two to three years from selling, the highest-value work you can do is preparation. The multiple improvement from that preparation, say, moving from 3× to 4× on a $600K adjusted EBITDA,is worth $600,000. A broker's contribution to your net sale price is, in many cases, lower than the value of good preparation done two years earlier.

Honest assessment of your business's weaknesses

A broker who has just signed your mandate has a commercial incentive to keep you engaged and optimistic. Telling you that your customer concentration is too high, your owner dependency will kill your multiple, and your financials need two years of cleanup before you should list is not in their interest. They're only paid if a deal closes. They need you on the market now.

This isn't dishonesty. It's a structural outcome of how the incentive is designed. But it means that the frank conversation about your business's weaknesses, and how to address them, is typically not one you'll have with a broker on day one. It's the conversation you need before day one.

The conflict of interest in the broker model

This is the part that's rarely discussed explicitly but shapes every interaction.

A broker earns their commission when a deal closes. They earn nothing if you decide not to sell, if you take the business off the market, or if you reject an offer that doesn't meet your expectations. This creates a structural incentive: brokers are motivated to close a deal (any deal) rather than necessarily the right deal at the right price with the right structure.

In practice, this manifests in a few ways:

• Pressure to accept offers: When an offer comes in below your expectations, a broker's instinct is often to encourage you to accept rather than negotiate harder or wait for a better buyer. Holding out means months of additional work on their end with no guarantee of a better outcome, and no guarantee you don't eventually sell lower anyway.
• Reduced scrutiny of buyer quality: A broker's primary filter on buyers is whether they can complete the deal, not whether the deal terms are the best available to you. A buyer who can close quickly at a lower price may be preferred over a higher-priced buyer who will take longer.
• Deal structure opacity: Commission is typically calculated on headline price, not on net proceeds after structure adjustments. A $3M offer with a 30% earnout pays the broker the same as a $3M offer in full at settlement, but delivers a dramatically different outcome for the seller if the earnout doesn't pay.

When a broker IS the right choice

Having laid out the costs and conflicts clearly, it's worth being equally clear about when a broker is genuinely the right option.

When you need broad market access

If your business serves a wide buyer pool, a retail business, a trade franchise, a hospitality business, or any business where individual buyers might come from anywhere,a broker's listing platform access and inbound enquiry management is genuinely valuable. You can't personally field 40 buyer enquiries while running a business. A broker handles that funnel.

When you have no existing buyer relationships

If you're not connected to the relevant acquirer community, if you don't know the likely trade buyers in your sector, have no relationships with PE firms, and aren't connected to the local search fund community,a broker's network can legitimately open doors you wouldn't otherwise reach. The quality of that network varies, but access to it has value. (For sellers with existing buyer relationships or those willing to build them, selling without a broker is often a viable alternative.)

When the business is transactionally straightforward

A business with clean financials, no owner dependency issues, a clear buyer profile, and a straightforward deal structure is exactly what brokers handle well. The more complex the business, the more its valuation depends on nuanced understanding that a listing broker may not provide.

When you want to outsource the administrative process

Running a business while simultaneously managing a sale process is genuinely difficult. For owners who want to hand off the day-to-day management of enquiry, scheduling, and process coordination, a broker provides real operational value even if their strategic contribution is limited.

When preparation first makes more sense

There's a different sequencing question that most business owners don't consider: not whether to use a broker, but when.

If you're two to three years from selling, engaging a broker now is almost certainly premature. A broker's mandate is typically six to twelve months. If your business isn't ready to achieve its full potential valuation, because the financials are mixed with personal expenses, because owner dependency is high, because you're one or two profitable years away from a meaningfully higher multiple,listing early costs you money.

The alternative sequence: understand what your business is worth today, identify the specific gaps between where it is and where it needs to be to achieve a better multiple, and spend twelve to twenty-four months closing those gaps. Then list. A business that moves from a 3× to a 4× multiple on $600K adjusted EBITDA generates $600,000 more in sale proceeds. No broker commission structure offers you anything close to that return on the same time investment.

If you suspect your owner dependency or other structural factors are suppressing your multiple, or if you'd like to understand what a buyer's recast of your financials would look like before you go to market, that's the conversation to have before the broker conversation, not after.

What to ask before you sign a broker mandate

If you've decided a broker is appropriate and are evaluating candidates, these are the questions worth asking before you sign anything:

• How many businesses have you sold in this size range in the last 24 months, and what were the outcomes? Not listings, sales. And not just "a few",actual numbers. A broker with 30 listings and 3 completions is telling you something important.
• How is your commission calculated, on headline price, total consideration, or net proceeds? And does it include earnout consideration if it's eventually paid?
• How many active listings does each broker in your firm carry? If the answer is 20+, ask how they'll dedicate meaningful time to your specific mandate.
• What specific buyers in your database are likely candidates for my business, and what's your plan to reach them? If the answer is vague, so is their buyer network for your situation.
• What happens if the business doesn't sell in the mandate period? Who owns the marketing materials, the information memorandum, and the list of buyers who were approached?
• What do you think the realistic sale price range is, and why? An honest broker will give you a range, explain the assumptions, and acknowledge the downside scenario. An overcommitted broker will give you the number you want to hear.

The final question (what's the honest downside scenario) is the one most sellers don't ask and most brokers are relieved not to answer. A broker who gives you a frank answer to it has earned the conversation. One who deflects it hasn't.

The honest bottom line

Business broker fees are significant, structurally non-negotiable in most mandates, and tied to a commission model that creates real conflicts of interest. None of that means you shouldn't use a broker. It means you should engage one with clear eyes about what the service is, what it costs, and what it doesn't include.

The best outcomes in business sales tend to come from owners who understood their business's value independently before they listed, addressed the key preparation issues before going to market, and then engaged a broker (or pursued buyers directly) from a position of informed strength. The worst outcomes tend to come from owners who listed too early, took the first reasonable offer, and discovered the full cost of the process only after they'd accepted heads of agreement.

Knowing the numbers in advance, both what your business is worth and what the sale process costs,is how you avoid that outcome.