---
title: "What is the Lehman formula, and what do advisors actually charge?"
description: "The 5-4-3-2-1 Lehman formula and the 10-8-6-4-2 double Lehman, applied to eight deal sizes and set against the fees disclosed in US merger filings."
site: Deal Cost Index
content_updated: 2026-10-17
license: CC BY 4.0
html: https://dealcostindex.com/lehman-formula.html
---
[M&A advisor fees](https://dealcostindex.com/ma-advisor-fees.html) · The Lehman formula

# What is the Lehman formula, and what do advisors actually charge?

The Lehman formula charges 5% of the first million of consideration, then 4, 3 and 2% of the next three, and 1% of everything above four million. The double Lehman doubles each rate. Both are published schedules, not observed fees.

Because the top rate applies to the whole balance of a transaction, a schedule written for 1970s deal sizes converges towards its final rate as deals grow. The second table below sets that arithmetic against the fees disclosed in 660 US merger filings.

## The two schedules, applied

| Deal value | Lehman fee | Lehman as % of value | Double Lehman fee | Double Lehman as % of value |
|---|---|---|---|---|
| $10M | $200K | 2.00% | $400K | 4.00% |
| $25M | $350K | 1.40% | $700K | 2.80% |
| $50M | $600K | 1.20% | $1.2M | 2.40% |
| $100M | $1.1M | 1.10% | $2.2M | 2.20% |
| $250M | $2.6M | 1.04% | $5.2M | 2.08% |
| $500M | $5.1M | 1.02% | $10.2M | 2.04% |
| $1B | $10.1M | 1.01% | $20.2M | 2.02% |
| $5B | $50.1M | 1.00% | $100M | 2.00% |

These rows are arithmetic, not evidence: a published schedule applied to a round number. No filing in this dataset states that a fee was computed this way, and nothing here is a view on what any engagement should cost.

## The schedules against disclosed fees

Disclosed fees are total target-side advisor fees as a share of deal value, for deals within 2× of the size on that row, from the same records as the [fee bands](https://dealcostindex.com/ma-advisor-fees.html).

| Deal value | Disclosed deals within 2× | Median disclosed fee | Middle half disclosed | Lehman | Double Lehman |
|---|---|---|---|---|---|
| $10M | 6 | 6.10% | 2.72%–10.29% | 2.00% | 4.00% |
| $25M | 17 | 5.90% | 2.72%–8.57% | 1.40% | 2.80% |
| $50M | 34 | 3.80% | 2.55%–6.29% | 1.20% | 2.40% |
| $100M | 44 | 2.69% | 1.20%–4.58% | 1.10% | 2.20% |
| $250M | 58 | 2.60% | 1.73%–3.66% | 1.04% | 2.08% |
| $500M | 85 | 2.55% | 1.73%–3.29% | 1.02% | 2.04% |
| $1B | 103 | 2.20% | 1.58%–2.71% | 1.01% | 2.02% |
| $5B | 71 | 1.31% | 1.02%–1.63% | 1.00% | 2.00% |

Disclosed fees come from public-target transactions and reflect what those boards negotiated, including deals with several advisors. A fee on a private transaction of the same size is not disclosed anywhere and is often higher. Nothing on this page is advice on what to pay or on whether a fee was reasonable.

## The rest of the engagement

What advisors were actually paid, by deal size, client, firm and industry, is on the [M&A advisor fee page](https://dealcostindex.com/ma-advisor-fees.html). How much of a fee depends on closing, and how often a retainer, an expense cap or a credit is mentioned at all, is on the [engagement terms page](https://dealcostindex.com/ma-engagement-terms.html). What the fairness opinion costs on its own is on [its own page](https://dealcostindex.com/fairness-opinion-cost.html).

## Common questions

### What is the Lehman formula?

A fee schedule that charges 5% of the first million of consideration, 4% of the second, 3% of the third, 2% of the fourth and 1% of everything above four million. It was written for 1970s deal sizes, which is why the rate it produces falls towards 1% as a transaction grows.

### What is the double Lehman formula?

The same schedule with the rates doubled, 10-8-6-4-2, which keeps a meaningful fee on a small transaction where the original schedule produces very little. Both are shown above, applied to the same deal sizes.

### Do advisors still charge the Lehman formula?

The merger filings in this dataset do not state a schedule, they state an amount. The second table sets what each schedule produces against the median fee disclosed for deals of that size, so the two can be compared directly rather than argued about.

Deal Cost Index. Data: CC BY 4.0.