If you are circling the idea of selling a company in London, Ontario, the first real shock tends to be the fee conversation. The numbers sound abstract when you start, then feel very concrete once you picture a wire transfer landing in your account and a slice going out to the intermediary who got the deal across the line. I have sat on both sides of that table, as an owner who exited and as an advisor helping other owners do the same. Fees matter. Structure matters more.
The right structure aligns incentives, keeps your process moving, and reduces the chance of last‑minute surprises. The wrong structure creates friction, corners your options, or leads you to accept the wrong offer because the advisor wants a faster close. London’s market has its quirks, especially around minimum fees, tax treatment, and how real property in a deal can change who is allowed to represent you. Let us walk through what you will see, what is fair, and how to negotiate with judgment.
What a broker actually does to earn a fee
On paper, a business broker or lower mid‑market M&A advisor brings you buyers and helps you get to closing. In practice, the work is more layered:
- Curating the buyer universe. Strategic acquirers, private equity with relevant theses, well‑capitalized individual buyers, and sometimes an unconventional operator two cities over who wants a bolt‑on. Preparing the business for scrutiny. Normalizing financials, guiding you on addbacks, clarifying working capital requirements, and identifying deal breakers early. Packaging the story. A confidential information memorandum that is crisp, defensible, and free of contradictions. Running a process. Staging outreach, controlling NDAs, guiding site visits, keeping comparables and valuation defensible, and sequencing offers to create real tension, not noise. Managing diligence and closing. Herding the lawyers and accountants, tackling tax planning, navigating landlord consents and lender approvals, and solving the two or three issues that always feel existential in the final month.
I list that out because it frames why commission structures look the way they do. Good processes require upfront work, multi‑month effort, and uncommon emotional energy. That shows up in fees.
What London, Ontario sellers commonly see
For owner‑managed companies between about 300,000 and 10 million in enterprise value, commission structures in Southwestern Ontario tend to fall into a few buckets. Firms call them different names, but the guts are similar.
- Straight percentage, often 8 to 12 percent for deals under 2 million, tapering down as deal size rises. Tiered percentage schedules. A higher rate applied to the first dollar tranche, then a lower rate to the next tranche, and so on. This addresses the fairness question on larger deals. The so‑called Lehman‑style formulas, adapted for private businesses. You might see 10 percent of the first million, 8 percent of the second, 6 percent of the third, and 4 percent thereafter. Some firms compress those tiers. Minimum success fees. A floor, commonly 30,000 to 75,000, that applies if the percentage would otherwise produce a smaller fee. For very small transactions, the minimum is often the fee. Retainers or work fees that are either fully or partially credited at close. More common with mid‑market advisors and with businesses that need serious cleanup before market.
Across these, the taxes matter. In Ontario, fees typically carry HST. Plan for the extra 13 percent on top of whatever you agree to pay the broker, and speak with your accountant about how you book it.
A quick glossary of fees you will see
- Success fee. The big one. Paid at close, calculated on enterprise value or equity value depending on your agreement, often net of assumed debt but inclusive of working capital norms. Retainer or work fee. A monthly or upfront amount to initiate the engagement, sometimes credited against the success fee, sometimes not. Marketing or data room expense. Reimbursement for paid databases, target research, marketing collateral, paid ads, or virtual data room subscriptions. Some firms bake this in, some pass it through with caps. Minimum fee. The floor below which the success fee cannot fall. You should confirm whether HST applies on top of this figure or is included. Tail fee. The period after the engagement ends during which a fee is still owed if a buyer introduced during the mandate ends up closing a deal with you.
How the math plays out with tiers
Tiered schedules feel opaque until you run the numbers. Here is a grounded example I have seen in London on a 3.2 million sale.
- 7 percent on the first 1 million equals 70,000. 5 percent on the next 1 million equals 50,000. 3 percent on the remaining 1.2 million equals 36,000.
Total success fee: 156,000, plus HST where applicable. If the agreement had a 100,000 minimum, it would not matter here because the tiered fee exceeds the floor.
On a smaller transaction, say a 450,000 sale of a specialty retailer, a 10 percent fee would yield 45,000. If your agreement has a 40,000 minimum, you are paying 45,000 because the percentage is higher than the floor. If you negotiated 8 percent with a 40,000 minimum, you would still pay 40,000 even though 8 percent of 450,000 is 36,000. This is where owners often feel the bite. The broker knows the process takes just as much effort to package, market, and close a very small business as it does a modestly larger one, so floors are common.
For transactions above roughly 5 million, you will see rates compress further. Firms operating closer to mid‑market practices may quote 3 to 6 percent with steeper tier breakpoints and larger minimums. Those teams often bring more granular buyer relationships and heavier diligence support, which you feel when the process hits turbulence.
Enterprise value vs equity value and why you should care
Most owners focus on the cheque they take home and forget that the success fee is tied to a definition. Two common definitions drive the calculation:
- Enterprise value, which includes equity value plus net debt, is sometimes used to anchor the fee. If so, clarify whether cash left in the business is excluded and how normalized working capital is treated. If the buyer assumes debt, you do not want to pay a fee on liabilities that do not touch your pocket. Equity value, which is enterprise value minus net debt plus cash, can be cleaner from a seller’s perspective. Many main street and lower mid‑market brokers in Ontario will express fees as a percentage of the price paid for the shares or assets, exclusive of inventory adjustments and working capital pegs.
Your engagement letter should be painfully specific on this point, including examples. If the broker resists adding examples, consider it a yellow flag.
What happens when real estate is in the mix
Plenty of London businesses own their building. When the property is part of the sale, you run into an added layer. In Ontario, trading in real estate requires registration. Some business brokers hold the necessary registration and can handle both the company and the property. Others will bring in a partner who is registered or advise you to list the property separately with a real estate brokerage while they sell the operating company. That split can complicate the fee. You may see one fee for the business and a separate real estate commission. Get clarity on whether the business broker expects a fee calculated on the combined deal or only the operating assets, and make sure your real estate representative and your business broker are not both claiming a piece of the same value.
Retainers, work fees, and when they help
Owners often balk at retainers. The thought of paying before you know if a deal will happen feels off. That reaction is natural. In my experience, a modest retainer with a clear credit against the success fee has two benefits. It ensures the broker has some baseline cash flow to staff your project, and it forces both sides to commit. When an owner pays nothing upfront, it is easier to delay the hard prep work. When a broker collects a large retainer without a credit, the misalignment can show up as weak outbound effort.
Fair ranges I have seen in London and nearby markets: 2,000 to 7,500 per month during the active marketing months for smaller deals, or a flat initiation fee in the 5,000 to 25,000 range for more complex mandates, credited fully or partially at close. If a firm quotes a retainer with no credit and a high minimum success fee, ask what part of the process the retainer specifically funds. If you are paying for a valuation or a quality of earnings report, confirm who owns the work product.
Expenses and pass‑throughs
Expect to see language around reimbursable expenses. Keep this tight. Cap the monthly amount without your written approval. Clarify what counts as an expense. I prefer agreements that bake typical marketing and data room costs into the fee and only pass through extraordinary items, like a paid industry database that is obviously useful for your niche. If the firm intends to run paid ads to surface buyers searching phrases like off market business for sale near me or small business for sale London Ontario near me, agree on a budget ceiling and reporting cadence. The goal is to prevent nickel and diming while still giving the broker room to do smart outreach.
Who pays the fee, seller or buyer
In most main street and lower mid‑market transactions in Ontario, the seller pays the intermediary. Buyer‑side fees exist, especially where an individual buyer or a small PE fund retains an advisor to source proprietary deals. If you are approached by a buyer’s broker who asks you to contribute to their fee, tread carefully. You do not want to fund the person negotiating against you.
The gray zone happens when a listing broker presents a buyer without a representative and tries to double‑end the deal. The broker may suggest a single success fee that covers both sides. Legally possible. Practically risky. If you consider it, ask for a clearly reduced fee that reflects the broker’s savings and demand an explicit acknowledgment of the conflict, along with a commitment to neutrality. Better yet, retain your own sell‑side advisor so you are not flying solo against someone paid on both ends.
Tail periods, exclusivity, and how they land
Two sections of an engagement letter get less attention than they deserve: exclusivity and the tail.
Exclusivity gives the advisor the right to represent you for a set period, often 6 to 12 months. During that time, anyone you sell to triggers the fee, even buyers you sourced yourself. This is fairly standard. If you have an active inbound pipeline, negotiate a carve‑out list at the start with names you can still close independently, perhaps with a reduced fee if the broker meaningfully supports the diligence.
The tail protects the advisor after the mandate ends. Typical tails run 12 to 24 months and apply to buyers introduced during the engagement. Make sure the agreement requires the broker to deliver a written list of covered buyers within a tight window after termination. Without that, tails can become open‑ended arguments.
Earnouts, vendor take‑backs, and contingent payments
When part of your price is contingent, the fee mechanics get tricky. Suppose you sell for 2 million at close with a 500,000 earnout over two years. Some advisors will ask for their full fee calculated on the headline price, payable at close. Others will split it, taking the fee on the cash at close and a subsequent fee as you receive earnout payments. Push for the split. The risk https://kzq4a.mssg.me/ of an earnout should not sit with you alone.
The same logic applies to vendor take‑back notes. If the buyer pays part of the price via a note, structured at market terms, it is reasonable that the fee on that portion comes due as you receive payments, not entirely upfront. When advisors resist, ask if they will discount the rate on the contingent slices.
Negotiation levers that actually move the needle
- Insist on a tiered fee above a threshold that reflects your likely value, not a compressed tier that only kicks in where you will never land. Tie the definition of transaction value to equity value and exclude assumed debt and excess cash, with examples in the agreement. Split fees on contingent consideration and vendor take‑backs, paid when you are paid. Cap reimbursable expenses and require pre‑approval for anything above a modest monthly ceiling. Add a carve‑out list for active buyer conversations you have already started, with a reduced fee if the advisor adds material value.
A note on search behavior and “near me” results
If you are the buyer in London, you probably googled phrases like businesses for sale London Ontario near me, small business for sale London near me, or companies for sale London near me. Those searches will surface listing portals, local brokerages, and the occasional “off market business for sale near me” teaser. Do not be put off by the “off market” label. Many genuine opportunities are shopped confidentially, and brokers often test interest lists before publishing anything.
On the sell‑side, you might have typed business broker London Ontario near me or business brokers London Ontario near me and found a mix of independent boutiques and franchise networks. Some searchers even plug in branded terms like sunset business brokers near me or liquid sunset business brokers near me. Treat any brand name you do not recognize as a prompt to verify credentials, not as a signal of quality or reach. Ask for references in your industry, not just testimonials on a website.
If you want to buy a business in London Ontario near me or buying a business in London near me without wading through portals, call a handful of local brokers and ask to be on their confidential buyer lists. You will occasionally see a quiet note about a business for sale in London Ontario near me before it is widely marketed. That early look can help you prepare financing and move quickly when fit appears.
Real examples from London and nearby markets
A specialty retailer in a high‑traffic London plaza. The owner wanted out within 9 months. Revenue was just under 1 million, SDE roughly 150,000. Two brokers pitched. One proposed 10 percent with a 40,000 minimum and no retainer, plus reimbursable marketing up to 1,000 per month. The other proposed 8 percent with a 50,000 minimum and a 5,000 upfront work fee credited at close. The owner chose the first. The business sold for 450,000 all cash at close. The fee landed at 45,000 plus HST. The minimum never came into play. The process needed a landlord consent that almost derailed the deal, which is where the broker earned their keep.
An industrial services company with crews across Middlesex County. EBITDA hovered near 800,000. The advisor recommended a targeted outreach to strategics and a few financial buyers looking for a platform. The fee was tiered, 7 percent on the first million, 5 percent on the next million, 3 percent thereafter, with a 100,000 minimum and a 10,000 initiation fee credited at close. It sold for roughly 3.2 million with a 300,000 vendor take‑back. The advisor took the success fee on the cash at close and a smaller fee component as note payments came in. The seller appreciated the split because it aligned everyone during the post‑close transition.
A SaaS tool with customers across Canada but based in London. Recurring revenue near 1.2 million. The buyer insisted on an earnout tied to churn targets. Headline price was 1.1 million, but only 800,000 at close. The broker’s original engagement called for the success fee on the total price at close. The seller pushed back. They agreed to a fee on the 800,000 at close and for the remainder to be paid pro rata as earnout milestones hit. Two months in, churn spiked. If the seller had paid the full fee upfront, there would have been resentment. With the split, everyone stayed focused on customer success.
How buyers and sellers meet in this market
For buyers searching business for sale London Ontario near me or business for sale in London near me, the widest nets still involve listing sites and broker pipelines. Yet some of the best fits happen through accountants, lawyers, and bankers who know which owners might be ready to retire. If you are buying a business London Ontario near me, let your lender and your accountant know your criteria. They often hear rumblings before anything hits the open market.
For a seller ready to sell a business London Ontario near me, shortlist two to four brokers whose recent deals look like your company. Ask how they market to buyers who search buying a business London near me and how they surface strategic acquirers who do not read listing sites. Then ask for candor about valuation. A broker who dangles a dream price is not doing you a favour if they cannot build a buyer set that sees the same value.
I also look for comfort with confidentiality. In a city the size of London, word travels. Good brokers are disciplined about NDAs, use generic descriptions until buyers are qualified, and time site visits when foot traffic is low. If they are cavalier about keeping names out of teasers, consider that a cultural tell.
Practical steps to choose and engage the right broker
Start with conversations, not just proposals. Talk through your financials, your goals, and your constraints. If succession within your team is possible, a broker can still help structure a management buyout, find outside financing, and negotiate terms, often for a reduced fee since outreach is narrower.
Ask for their view on minimum fees and when they have waived them. A firm that has never waived a floor may not be flexible when the market shifts under your feet. Conversely, a firm that never sets one might be too casual about process intensity.
Review a sample confidential information memorandum with redactions. You want to see crisp storytelling without hype. Non‑financial buyers need help understanding why your business endures. Strategic buyers need evidence that your numbers are clean and your customers are sticking around.
Probe their buyer lists. A credible advisor knows which strategics could benefit from your customer base and which financial buyers have dry powder for your range. If they cannot name a half‑dozen plausible parties in the first meeting, you are probably not in their wheelhouse.
Finally, run the engagement letter past counsel who has seen dozens of these, not just any lawyer. The difference between an equity value definition that protects you and one that does not can be a sentence you might overlook.
The fee is a tool, not a tax
A good commission structure puts the broker in your boat. It nudges them to aim for a better outcome, not a faster one, while recognizing the real work that goes in before a single buyer signs an NDA. In London’s market, expect to see double‑digit percentages for smaller deals, tiered schedules as value rises, minimums that reflect the true effort involved, and sensible retainers where the prep work is heavy. Push for clarity around definitions, contingent payments, and expenses. Make sure HST is accounted for in your math. Then pick the person you trust to represent your company in the messiest parts of a transaction, because the moment will come when confidence and calm matter more than any line item in the fee grid.
Owners who do that tend to close with fewer regrets and fewer surprises. Buyers who respect that process tend to get closer looks and cleaner deals. That is how good transactions happen, regardless of how you found each other, whether through a quiet referral, a direct call, or a simple search for buy a business in London near me.