The Double Lehman formula is a stepped success-fee schedule that M&A advisors use as a starting point on mid-market deals. It comes from the original Lehman formula (5-4-3-2-1) that Lehman Brothers used in the 1960s and 1970s. The name is not one scale. The common Double Lehman doubles those rates to 10-8-6-4-2. Mid-market shops also use a 10-9-8-7-6 schedule that then steps to 5% and 4%. On that mid-market schedule, a $5 million deal is a blended 8% ($400,000) and a $20 million deal is a blended 5.25% ($1.05 million). The engagement letter sets the fee.
The original Lehman formula, also called the Lehman Scale, set success fees on each million of transaction value:
- 5% of the first $1 million
- 4% of the second $1 million
- 3% of the third $1 million
- 2% of the fourth $1 million
- 1% of everything above $4 million
Lehman Brothers built that scale for capital-raising and advisory work in the 1960s and 1970s. Inflation made a $5 million deal ordinary. Advisors raised the rates.
Double Lehman (10-8-6-4-2). The most common meaning of Double Lehman doubles the original percentages and skips the odd numbers: 10%, 8%, 6%, 4%, then 2% of everything above $4 million. On a $5 million deal that is $300,000, or 6% blended.
Modern or Double Percentage Lehman (10-9-8-7-6-5-4-3). A second mid-market variant steps one point at a time and then holds at 3% above $8 million.
Another mid-market starting schedule used on many lower-middle-market engagements is:
- 10% of the first $1 million of transaction value
- 9% of the second $1 million
- 8% of the third $1 million
- 7% of the fourth $1 million
- 6% of the fifth $1 million
- 5% of the sixth through tenth $1 million
- 4% of everything after $10 million
On that schedule a $5 million transaction is $400,000 (8% blended). A $20 million transaction is $400,000 for the first $5 million, plus 5% of the next $5 million ($250,000), plus 4% of the remaining $10 million ($400,000), totaling $1,050,000 (5.25% blended).
Advisors treat any of these scales as a starting point. They add retainers, monthly work fees, minimums, and tail provisions. They also cut or raise a band to match deal complexity. Read the engagement letter. The label Double Lehman is not enough on its own.
This is general education, not legal, tax, or investment advice.