A fee paid during the engagement regardless of whether the company sells, typically monthly. It funds the work up front and is often credited against the success fee at completion.
Why it matters
A success fee only pays the adviser if the company sells. That aligns
incentives well, but it also means the adviser is asked to fund months of unpaid work on the
chance of a payment that may never arrive — and a company that never sells still consumed real
time preparing materials, building a buyer list, and running a process. A retainer is how that
risk gets shared: a fee paid on a schedule, usually monthly, regardless of outcome.
For a founder, a retainer is worth reading closely for two reasons. It is real cash going out
before you know whether the sale will happen, and it is a negotiable amount — advisers vary
widely in what they ask for, and a retainer sized to the actual expected effort is a fairer
number than one sized to what the market will bear.
How it works
Three questions decide whether a retainer is reasonable:
How much, and for how long. A retainer running for the length of the mandate adds up; check
the total against what you would be comfortable paying even in the scenario where no sale
happens at all.
Whether it is credited against the success fee. Many mandates credit some or all of the
retainer paid against the fee due on completion, so the seller is not effectively paying twice.
Whether that credit applies, and to what portion, should be written down rather than assumed.
What it buys. A retainer tied to specific deliverables — materials prepared, buyers
approached, a process actually run — is easier to hold an adviser accountable to than one that is
simply a fee for being appointed.
A retainer is not a red flag on its own. Advisers who work for success fees alone sometimes
prioritize the deals most likely to close quickly over the one that needs more patient work —
which can cut against a founder whose business needs a longer, more careful process.
Questions people ask
- Is a retainer normal in a sell-side mandate?
- Yes. Many advisers charge a retainer alongside a success fee, because a success-fee-only arrangement asks the adviser to fund the entire sale process on the chance of a payment that only arrives if the deal closes. A retainer shares that risk between the seller and the adviser instead of placing it all on one side.
- Does a retainer get refunded if the company does not sell?
- Generally no, because it is compensation for work already done rather than a deposit against a future fee. What a seller can and should negotiate is whether the retainer is credited against the success fee if a sale does close, which reduces the total the seller ends up paying once completion happens.
See also
More in Sell-side mandate
- Covered parties — The agreed list of buyers an adviser introduced, which the tail period applies to.
- Exclusive mandate — A mandate under which only one adviser may run the sale for its term.
- Mandate — The engagement under which an adviser is appointed to sell a company: what they will do, for how long, and how they are paid.
- Success fee — The adviser’s payment on a completed sale, normally a percentage of the price.
- Tail period — A window after the mandate ends during which the adviser is still owed a fee if the company is sold to a buyer they introduced.
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Updated 2026-09-09