How the Lehman Formula Translates into a Commission Payment

The Lehman Formula is calculated by million dollar amount. For example, if a business owner is selling $5 million worth of stock, his fee would be totaled as follows using the Double Lehman Scale:

• 10% of the first million: $100,000; plus
• 8% of the second million: $80,0000; plus
• 6% of the third million: $60,000; plus
• 4% of the fourth million: $40,000; plus
• 2% of the fifth million: $20,000.
• Total commission payment or fee paid to Broker or M&A Intermediary: $300,000

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Pre-qualify buyers before sharing sensitive information.

If you feel awkward about asking a prospective buyer for financial and business background information before divulging your business name, you’re not alone.

But realize this:
• Qualified buyers expect you to screen out other buyers before sharing sensitive information.
• Qualified buyers care about the privacy of your business information because they want to know that the business they’re buying has carefully protected its trade secrets and financial information.
• Qualified buyers are serious shoppers and they’re ready with the information necessary to take the next steps.

According to business brokers, nine out of ten respondents to business-for sale ads aren’t qualified to make the purchase. That’s why pre-qualification is so important. The sooner you learn who can and can’t buy your business, the better – both for you and for your ultimate buyer. An effective way to pre-qualify prospects is to describe your business and response requirements in a way that helps unqualified buyers opt themselves out.

By describing the size of your business and your purchase price, and then by asking interested parties to respond by describing their purchase capabilities, you stand a good chance of hearing only from those who, in fact, are qualified to buy your business. In every ad you place, in print or online, ask interested parties to respond with information that describes:

• What they’re seeking from a business purchase
• Their purchase timeline
• A description of their related business experience
• Their interest in and ability to buy your business You can cover this request in one sentence: Please respond describing your related business background, the type and size business you seek, your investment capability and your interest in this business.