Buy-side M&A fees in the UK: what you'll actually pay

Buy-side M&A fees in the UK are less visible than they should be. Few advisers publish prices, and proposals vary in structure, which makes them hard to compare. This guide sets out the fee models you will meet, the ranges we could find published sources for, what sits outside the adviser's fee, and what to push back on.

What fee models do buy-side advisers use?

Most proposals combine a fee for time with a fee on success.

Two other points from the Firmex survey are worth knowing. About half of advisers (51%) deduct the engagement fee from the success fee, so you are not paying twice. And around 80% have travel costs reimbursed by the client, with about two-thirds passing on data room costs.

What will I pay at different deal sizes?

There is no UK survey that splits buy-side fees by deal size. The best published guides are below. Read them as context, not a price list.

To see what a scale means in pounds: on a £6m deal, the classic Lehman scale gives 5% of the first £1m (£50,000), 4% of the second (£40,000), 3% of the third (£30,000), 2% of the fourth (£20,000) and 1% of the last £2m (£20,000). That is £160,000, or about 2.7% of the price.

Who pays VAT, and can I get it back?

UK adviser fees normally carry VAT at the standard rate of 20% (GOV.UK). Quotes are usually "+ VAT", ours included.

Getting it back is not automatic. HMRC's guidance says a holding company can usually only recover VAT on acquisition costs if it is in business for VAT, for example by providing real management services to its subsidiaries for a proper charge. A company that simply holds shares for dividends cannot (HMRC VIT40600). Ask your tax adviser how your buying company should be set up before you sign the engagement letter, not after.

What is not included in the adviser's fee?

Almost always, due diligence. Financial, tax and legal due diligence are done by separate accountants and lawyers, under their own engagement letters.

• Mid-market deals (£20m–£100m): one UK guide puts total buy-side due diligence fees at £500,000 to £2m (FD Capital).
• Smaller deals (under $10m, US figures): financial due diligence $10,000–$35,000, legal $5,000–$15,000, tax $10,000–$30,000 (Peony). We found no equivalent UK survey.
• Legal documents for small purchases: quotes on one UK marketplace run from £750–£2,000 for a £10,000–£150,000 purchase, £1,500–£6,000 up to £1.5m, and usually over £8,000 above that (Lexoo). In our experience, a full legal due diligence and sale and purchase agreement on a multi-million-pound share deal costs more.

In our experience, a red-flag financial review, which looks only for deal-breakers, costs less than a full report and is often enough for a smaller deal. Ask for both quotes.

Then there is tax on the deal itself. If you buy shares, stamp duty is usually 0.5% of the price (GOV.UK). On a £6m share purchase that is £30,000. Asset deals have different taxes, including SDLT on any property.

What are the red flags in a fee proposal?

• A large retainer with no milestones. You should know what you will have by when, and what happens if it doesn't arrive.
• A retainer with no end date. Monthly fees that run until "completion" reward a slow process.
• A success fee that rewards overpaying. A flat percentage of the price means the adviser earns more if you pay more. Ask for a fee tied to a target price range, a cap, or a fixed completion fee.
• A high minimum fee on a small deal. The floor can turn a "4%" fee into 8% or more.
• A wide abort fee. You should never be penalised for walking away from a deal the diligence shows is wrong.
• Paying twice. Check whether retainers are deducted from the success fee.
• Fees on deals the adviser did not find. Some letters claim a success fee on any acquisition you make in the period. Limit it to targets they introduced or worked on.
• No word on VAT or expenses. Get both in writing.
• An adviser who also sells businesses in your sector. That is a conflict on price.

How does Acquisitiv charge?

• 90-Day Acquisition Project: a fixed fee, agreed before work starts. Your target universe is mapped and agreed by week 3. By day 90 you have at least 5 serious sellers at your table, or we keep approaching at no extra fee. One client per target market at a time.
• After day 90: no retainer. Support through offer, due diligence and completion is agreed per deal and paid only if you complete.
• Acquisition Accelerator (if you want to run the process yourself): a fixed programme fee, with a full refund in the first 30 days.

We'll give you the figures in your briefing, in writing, before you commit to anything.

Due diligence, legal fees and stamp duty are not included. Those are paid to your accountants, lawyers and HMRC.

For when an adviser is worth paying for, with a worked example, read what a buy-side M&A adviser does. Or see how our buy-side advisory works.