Let me tell you about the phone call that nearly made me spit out my coffee.
A buddy of mine sold his HVAC company last spring. Good business, solid margins, buyer lined up. He called me the day after closing, all excited about the wire hitting his account. Then he went quiet for a second and said, “Hey, quick question. Why did the broker’s cut look almost double what we talked about?”
I sighed. Not because he got scammed, exactly. Because nobody had walked him through the Double Lehman formula before he signed.
So let’s fix that right now, friend to friend.
What the Lehman Formula Actually Is
The classic Lehman formula is an old Wall Street convention for paying finders and intermediaries on deal transactions. It’s a tiered percentage that slides down as the deal size goes up. The traditional version looks like this:
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5% of the first $1 million
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4% of the second million
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3% of the third million
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2% of the fourth million
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1% of everything above $4 million
On a $2 million deal, that’s $50,000 plus $40,000, so $90,000 total. Simple enough, right?
Enter the Double Lehman
Here’s where it gets spicy. The Double Lehman doubles each percentage. Same tiers, same math, just twice the bite:
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10% of the first $1 million
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8% of the second million
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6% of the third million
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4% of the fourth million
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2% of everything above $4 million
That same $2 million deal now costs $100,000 plus $80,000. That’s $180,000. Double. The name isn’t marketing fluff.
Why Sellers Agree to It
Fair question. Nobody volunteers to pay more.
Here’s the reality: Double Lehman shows up most often on smaller transactions, think main street businesses under a few million in enterprise value. Brokers take these deals because the absolute dollar commission on a small sale is thin. Doubling the formula keeps the work worth their time. It also tends to appear when the broker is doing heavy lifting: marketing, buyer vetting, negotiation, the whole circus.
Also worth knowing: some brokers quote Double Lehman as a “success fee” structure with a minimum. Ask about that minimum. Trust me on this one.
The Part Nobody Explains at Closing
Commission is rarely the only line item. When my buddy added it all up, the closing statement read like a restaurant bill after a bachelor party:
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Broker success fee (Double Lehman)
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Legal fees for both sides, sometimes
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Accounting and quality of earnings work
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Escrow and closing costs
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A tail fee if he’d signed a bad listing agreement
The formula quote was the headline. The final number was the whole story.
How to Protect Yourself Before You Sign
A few habits I’ve picked up over the years, learned the expensive way:
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Get the commission structure in writing with a worked example at your actual deal size. Not a range. Your number.
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Ask whether it’s single or Double Lehman, and ask why.
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Clarify the tail period. How long after the agreement ends do they still get paid if a buyer they introduced comes back?
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Negotiate the tiers above $1 million. That’s usually where there’s room.
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Read the closing statement line by line before you wire anything.
The Bottom Line
The Double Lehman isn’t a scam. It’s a legitimate structure, and plenty of brokers earn every dollar of it. But it’s also the kind of thing that gets glossed over in a handshake and a smile.
My buddy ended up fine. The business sold, the check cleared, and he only grumbled about it for a month. But he told me later he wished someone had explained the math before the ink dried.
Consider this your explanation. Now go read your listing agreement. Twice.