Ask The Expert

Are upfront fees bad?

No. Upfront fees should not be charged if no service is being provided. For example, if an advisor requires a $5,000 retainer fee and does not provide any specific service for this fee, then it is not recommended.

However, the truth is that the more experienced the advisor, the higher the likelihood they will charge upfront fees, especially if they invest a significant amount of time preparing and packaging a business for sale. Most M&A advisors invest substantial time preparing and packaging a business for sale, and they are reluctant to do so without being paid upfront for their expertise. Most business brokers make the claim that upfront fees are objectionable. They avoid them because they don’t have the processes and staff to provide enough value to justify charging upfront fees. They would be singing a different tune if they could justify charging upfront fees by offering something of value in return.