An indemnity is a contractual tool that buyers and sellers use in acquisitions to allocate risk between them. Each party agrees to indemnify the other party for its actions. Indemnification obligations arise when a seller breaches a representation or a warranty that it made to the buyer, or the seller fails to perform a covenant that it promised...
The Lehman Scale is an industry accepted formula used by investment banks, M&A advisory firms, and business brokers to calculate the success fees on a sell-side (or sometimes buy-side) engagement.
The Lehman Scale is calculated based on a percentage of enterprise value as follows:
5% of the first $1,000,000, plus
4% of the second $1,000,000, plus,
3% of the third $1,000,000, plus,
2% of the fourth $1,000,000, plus,
1% of the remaining total.
The double Lehman is another variation of the above fee structure where the percentage increments go from 10%, 8%, 6%, 4% to 2%. Most investment banking engagements would also include a non-refundable work fee and a minimum level fee should a transaction close regardless of the transaction size. The size of the deal dictates how negotiable these percentages are.
Read More »
Don't miss out, get our best articles delivered to your inbox.
Terms for Selling Your Business:
Home | Advertising Info | Write for Us | About | Contact Us
Partner Sites :