The full bill for selling a business in Canada

In this illustration, selling a business in Canada costs about 8 to 13 percent of a $1 million price and 4 to 12 percent of a $10 million price, legal and accounting bills included. The fee structure decides most of the gap, and a Lehman scale costs less than five percent on large sales.

Where the money goes when a business sells

The cost to sell a business in Canada starts with the fee of the broker or M&A advisor who runs the sale, and for most owners that fee is the largest line. The lawyer and the accountant come next. A further group of costs is settled inside the deal itself, where it reduces the cash you receive at closing.

This page prices each line in dollars at three sale prices. The choice of who to hire is covered in business broker, M&A advisor, or selling it yourself, and what reaches your account after tax is worked through in net proceeds from a business sale. Where a fee level has a public source, the source is linked. Every other figure is marked as assumed for the illustration.

Four ways the fee is set

A business broker is usually paid a percentage of the price on closing, commonly around ten percent for small businesses, as our comparison of brokers and advisors notes. Some brokers add a listing fee paid up front.

M&A advisors more often charge a retainer or a monthly work fee while the sale runs, plus a success fee on closing. Many credit the work fee against the success fee. Where the business stays unsold, the work fee is still owed, which makes it the price of the attempt.

The success fee itself often follows the Lehman formula, a sliding scale that takes a smaller percentage of each additional million. The Morgan & Westfield glossary sets the original at 5 percent of the first million, falling one point with each further million to 1 percent on everything above $4 million. The Double Lehman doubles each step, so it runs from 10 percent down to 2.

InvestDeal charges five percent of the sale price on closing, and it is the only payment the seller makes. The owner of a business that stays unsold pays zero.

The Lehman arithmetic beside a flat percentage

Take, as an illustration, a business that sells for $3 million. Under the original Lehman scale the fee is $50,000 on the first million and $40,000 on the second. The third million adds $30,000, for a total of $120,000, or 4 percent of the price.

The Double Lehman doubles each of those amounts, so the same sale carries a fee of $240,000, or 8 percent. At $10 million both scales reach their lowest step on the last six millions. The original comes to $200,000 there and the double to $400,000.

A flat percentage keeps its share of the price as the price grows, while a Lehman scale takes a smaller share of each added million. At $1 million, five percent equals the original Lehman and costs half what the broker charges. The original Lehman costs $30,000 less on a $3 million sale. By $10 million both scales cost less than five percent, the original by $300,000 and the double by $100,000.

The broker row at $10 million is arithmetic only, since brokers mostly sell businesses priced under $2 million. For larger sales, an opinion piece on Advisor.ca in March 2025 put average M&A fees in Canada at 6 to 8 percent for deals around $5 million and at 4 to 6 percent for $10 million deals. Five percent sits inside that second band.

Add any work fee to the Lehman rows before you compare. A monthly fee of $5,000 over a ten month sale, assumed for the illustration, comes to $50,000. Many contracts credit it on closing, and the owner pays it in full if the sale stops.

The professional bills beside the fee

Your lawyer reviews the letter of intent and negotiates the purchase agreement that follows it. Your accountant prepares the statements a buyer will read and plans the tax, including whether the shares qualify for the lifetime capital gains exemption. The guide to who to hire to sell a business in Ontario sets out what each of them does, and its British Columbia counterpart covers that province.

A quality of earnings review is a check of your adjusted earnings by an outside accounting firm. A buyer may commission one during due diligence. A sell side review, paid by you and done before buyers see the numbers, finds the add backs a buyer will question first, and add backs buyers accept lists the usual ones.

A formal valuation by a chartered business valuator matters most where the buyer is related to you. On a sale to a related person below fair market value, the CRA treats the selling price as fair market value, so a sale to your children needs a figure that holds up. In a sale to an outside buyer the offers set the price, which is why the table below leaves the valuation out. Assumed for the illustration, one costs $10,000 to $30,000 depending on size, and choosing a business valuator covers who does the work.

Every cost totalled at three prices

The professional bills shrink as a share of the price, from 3 percent at $1 million to under 2 percent at $10 million. The fee structure decides most of the gap between the totals.

Selling costs also lower the tax. The CRA counts commissions and legal fees among the outlays and expenses subtracted from the proceeds before the gain is worked out. Where the lifetime exemption already covers the whole gain, that deduction saves little tax in the year of the sale.

Costs settled inside the deal

• Purification can come first. A company holding surplus cash or investments may have to move them out before a share sale so that its shares qualify for the exemption. The cost is the advisers’ time plus any tax the chosen method triggers, and purifying a company explains why the work starts two years ahead.
• Land transfer tax arises where the building goes to the buyer in an asset sale. The buyer pays it to the province on closing, and on a $1.5 million commercial building in Ontario the province’s formula gives $26,475. British Columbia’s property transfer tax on the same value is $28,000. A buyer pays that tax out of the same budget as the price.
• The closing statement settles prepaid items such as rent and property tax between the two sides, day by day. The working capital adjustment can move larger sums, dollar for dollar against a target set in the letter of intent.
• A term loan repaid at closing may carry a prepayment charge under its own terms. Read the loan agreement before you agree to a debt free price.

Comparing quotes at your own price

Ask every broker and advisor for the fee in dollars at the price you expect, with any retainer or listing fee added in. Then ask what you owe if the business stays unsold, since that answer separates a fee for a result from a fee for time.

Each figure on this page moves with the price, so the price comes first. The Quick AI valuation gives an early range in a few minutes, before you give anyone your name, and the Net proceeds tool runs the costs against it.

Fees for each sale route are calculated at the transaction value entered in InvestDeal compared with a business broker and InvestDeal compared with BizBuySell.

Questions owners ask

How much does a business broker charge in Canada?

Brokers are commonly paid around ten percent of the price on small sales, due on closing, and some add a listing fee up front. On a $1 million sale ten percent is $100,000, before the legal and accounting bills.

What is the Lehman formula?

It is a sliding success fee that starts at 5 percent of the first million of the price and falls one point with each further million, to 1 percent on everything above $4 million. The Double Lehman doubles each step. On a $3 million sale they come to $120,000 and $240,000.

Is five percent more or less than a Lehman fee?

It depends on the price. At $1 million five percent equals the original Lehman and is half the Double Lehman. At $10 million it comes to $500,000, which is $300,000 above the original Lehman and $100,000 above the double.

What do I pay if my business stays unsold?

That depends on the contract. A traditional advisor’s retainer or monthly work fee is owed whatever the outcome, and some brokers charge a listing fee up front. InvestDeal charges five percent of the sale price on closing only, so an unsold business costs its owner zero.