Retainer

A retainer is the fixed, usually monthly base fee of an M&A advisor, payable regardless of whether the transaction succeeds. It covers ongoing work on materials, buyer outreach and process management, and it also signals to the advisor that the client is serious. That is its real function: a sale process ties up substantial capacity over months, and without a fixed component the advisor would bear the entire risk of abandonment, which would lead either to higher success fees or to less care in preparation.

In the mid-market the amount typically runs in the low four to five figures per month, depending on deal size and the scope of the mandate. The retainer is normally credited in full or in part against the later success fee, making it economically an advance. This should be stated explicitly in the engagement letter. Besides the amount, the duration of payment, a possible cap on the number of months and whether payment ends on reaching defined milestones are all negotiated. Whether the advisor keeps the retainer if the process fails is a matter of negotiation and the real point of contention. For the client it is a fixed cost block that arises even without a deal, and it should therefore be assessed together with the success fee and expenses in a total view of transaction costs. Reimbursement of out-of-pocket costs and a tail period are also regularly agreed, under which a fee still falls due if the transaction closes after the mandate ends with a buyer introduced by the adviser.