Baton vs an Investment Bank: Cost, Process, and Which to Choose
Chat Joglekar
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6 min read
An investment bank, or M&A advisory firm, runs a structured, competitive sale for larger private companies. It is usually the right choice when your business is worth roughly $10 million or more, the deal is complex, or private equity and strategic buyers will compete. For most Main Street and lower-middle-market sellers, Baton is the better fit: no retainer, a flat 6% success fee paid only at close, and a dedicated advisor through closing.
This comparison is for owners choosing between the two. They mostly serve different segments: many banks will not take a sale below $5 million to $10 million, while Baton focuses on businesses worth $500K to $100M. Near the top of that range, a bank can be the better choice.
How an investment bank works
Who it serves: definitions vary, but Capstone Partners puts the lower middle market at $10 million to $250 million in enterprise value. In Firmex’s 2023-24 US survey of middle-market advisors, 47% had a minimum deal size of $5 million or more.
Retainers: about three-quarters of advisors charge one, most commonly $5,000 to $10,000 a month. Just over half (54%) credit it against the success fee.
Success fees: about half use the Lehman formula, where the rate falls as the price rises (5% of the first $1 million, 4% of the second, and so on). Many use a Double Lehman starting at 10%. Averages were 6.3% on a $5 million deal and 2.0% on $100 million. 75% of advisors charge a minimum success fee.
Process: a confidential information memorandum (CIM), an anonymous teaser to a target buyer list, non-binding indications of interest (IOIs), management meetings, then letters of intent (LOIs), per Capstone’s process guide.
Timeline: often 6 to 12 months. Capstone describes 6 to 9 months, and the Q2 2026 Market Pulse found lower-middle-market deals averaged 11 to 12 months from engagement to close.
Baton vs an investment bank
Baton | Investment bank | |
|---|---|---|
Who it is for | All sizes, focused on $500K to $100M in value | Typically $5M to $10M or more. Many set a minimum deal size. |
Upfront cost | None. No retainer or listing fee. | Usually a retainer, most often $5,000 to $10,000 a month |
Success fee | 6% of the total purchase price, paid at close | Sliding or flat scale, often with a minimum. Averages: 6.3% at $5M, 3.9% at $20M. |
Who runs the sale | Dedicated advisor through diligence and close | A banking team running a structured auction |
Buyers | Baton marketplace with 30,000 vetted buyers, major business-for-sale sites, and direct outreach to strategic buyers | A targeted list of strategic and private equity buyers |
Contract term | Three-month exclusive, then month to month | Set in each engagement letter. Check the term and tail period. |
Time to close | Offers in about 6 weeks. About 6 months from listing to close on average. | Often 6 to 12 months |
Pricing and features checked October 2026. Baton figures are from baton.com/pricing. Bank fees are negotiated, so the bank column shows typical ranges from the Firmex US M&A Fee Guide 2023-24, Capstone Partners, and the Market Pulse survey. Firmex’s 2024-25 edition says average fees have since risen slightly.
Where the difference shows up
On a $1.5 million sale, Baton’s 6% success fee is $90,000, with no retainer. Many banks would not take this deal. One that does will typically charge a retainer and a minimum success fee that can exceed what a percentage would produce. For reference, Divestopedia puts reasonable success fees on $1 million to $5 million deals at 6% to 8%, or $90,000 to $120,000 here, before retainers.
At $10 million the math changes. Baton’s 6% is $600,000. Divestopedia’s range for $5 million to $10 million deals is 4% to 6%, or $400,000 to $600,000, and a Double Lehman schedule (10%, 8%, 6%, 4%, then 2%) comes to $400,000, plus any retainers not credited back. At this size a bank can cost the same as Baton or less, and a competitive auction may lift the price.
Banks also usually charge before a deal closes and run a longer, more formal process. Baton charges nothing until close, sellers get offers in about 6 weeks, and you can test interest privately first with a free anonymous listing.
Which should you use?
Choose an investment bank if your company is worth roughly $10 million or more, you expect private equity and strategic buyers to compete, or the deal is complex: several owners, rollover equity, earn-outs, a carve-out, or buyers outside the U.S. Above $100 million, beyond Baton’s focus, a bank is the natural choice.
Choose Baton if your business is worth less than $5 million to $10 million, where many banks will not engage, or you want a flat 6% fee with no retainer, a free valuation, a dedicated advisor through close, and financing support for buyers.
Start with a number
Whichever route you take, know what your business is worth before you talk to anyone about fees. Get a free Baton valuation.
FAQ
Do I need an investment bank to sell my business? Usually not below $5 million to $10 million in value, since many banks set minimum deal sizes. Larger or complex companies that will draw private equity or strategic buyers often benefit from a bank’s auction.
How much does an investment bank charge to sell a company? Most charge a retainer, commonly $5,000 to $10,000 a month, plus a success fee at closing. In Firmex’s 2023-24 US survey, average success fees ran from 6.3% on a $5 million deal to 2.0% on $100 million, and most advisors set a minimum fee.
What is the difference between an investment bank and a business broker? Mostly size and process. Divestopedia says brokers usually handle companies worth up to about $3 million, while larger ones usually hire a boutique investment bank. See our guide to business broker commissions.
What is the Lehman formula? A success fee that falls as the price rises: 5% of the first $1 million, 4% of the second, 3% of the third, 2% of the fourth, and 1% of the rest. The Double Lehman uses 10%, 8%, 6%, 4%, and 2%, or $300,000 on a $5 million sale.
What are the alternatives to an investment bank? For Main Street and lower-middle-market owners, Baton, with a flat 6% fee and no retainer. We also compare Baton with an AI-assisted bank in Baton vs OffDeal and an M&A advisory firm in Baton vs Generational Equity.
More comparisons
See every option side by side on Compare Baton, or read another comparison:
Sources
Baton pricing, checked October 2026
US M&A Fee Guide 2023-24, Firmex with Axial and Divestopedia
Lehman Scale and Business Broker, Divestopedia
Lehman Formula, Morgan & Westfield
Defining the Middle Market and M&A Process, Capstone Partners
Market Pulse Survey Q2 2026, IBBA and M&A Source, August 2026