What does a debt adviser cost, and when is one worth paying for?
In short
How debt advisory fees work in the UK for a company raising £3–15m: a retainer plus a success fee of roughly 1 to 2% of the facilities raised, what moves the price, how an adviser differs from a commercial finance broker, when the fee recovers itself from sharper terms, and when a borrower does not need one.
Written by Gregory Elgunov, Managing Director · Last reviewed 27 September 2026
Almost every debt advisory fee in the UK mid-market combines a modest retainer that pays for the work with a success fee, paid only when the money arrives and set as a percentage of the facilities raised. For a company borrowing £3–15m the success fee sits at roughly 1 to 2% of the facility by market convention, the percentage falls as the deal grows, and the retainer is commonly credited against it at close. The calculator in section 05 tests whether the fee would earn itself on your numbers, and section 06 sets out when you do not need an adviser at all.
Written for the borrower’s side of the table. This is general guidance, not advice on your specific facility. It deepens the shorter answers in our working guide.
The work runs from sizing the debt to drawdown.
A debt adviser runs a financing on the borrower’s side of the table, end to end. The work covers how much debt the business can sensibly carry and in what structure, the materials a credit team underwrites from (the financial model, the information memorandum, the data room), and the banks, specialist lenders and funds writing this kind of deal this quarter, approached in parallel for comparable terms. The part that earns the fee comes last. The adviser negotiates the points that carry money over the life of the facility (margin, fees, leverage, covenants, security, prepayment terms) and drives the chosen deal through credit approval, diligence and documentation to drawdown. A company raises debt every few years; the adviser is in the market every week, with a live read of lender appetite and the competitive tension that moves a term sheet.
The short answer sits in the hub under what a debt adviser does, and the stage-by-stage shape of a mandate in how we work.
Most of the fee is contingent on the money arriving.
Market convention across the UK mid-market is a retainer plus a success fee, and the balance between them tells you how the adviser is aligned. The retainer, sometimes called a work fee or engagement fee, is kept modest against the deal, so that it commits both sides without making a failed deal profitable for the adviser. The success fee is the larger part, and Fig. 01 sets the two side by side.
The retainer and the success fee, part by part.
| Row | Retainer | Success fee |
|---|---|---|
| What it pays for | The work of building the model, preparing the lender materials and running the market | A financing that completes on terms you accept |
| How it is set | A fixed sum, modest against the deal | A percentage of the facilities raised, roughly 1 to 2% at £3–15m; lower on larger raises, higher on small ones, usually with a minimum fee |
| When it is paid | Up front, or monthly while the process runs | Only when the financing completes |
| At completion | Commonly credited in full against the success fee | Paid once, with any credited retainer counting toward it |
| If the deal dies | Normally the adviser’s compensation; check whether any further abort fee falls due | Not payable, unless you complete a financing within the tail, commonly twelve to twenty-four months |
The percentage falls as the deal grows because the work grows more slowly; a £30m raise is not six times the work of a £5m one. Whether it applies to committed or drawn amounts is a real term, because a facility with a large undrawn line reads very differently under the two bases, and the engagement letter should say which applies.
Within the range, complexity and stress push the price up, from an acquisition against a timetable or a multi-lender or intercreditor structure to a credit that needs careful framing, a covenant breach or a lender that wants out. A clean credit with a prepared data room and a realistic timetable pulls it down. The hub carries the short-form answer on how debt advisory fees are structured.
Who pays determines who the intermediary works for.
A commercial finance broker is typically paid a commission by the lender that wins the deal, usually a percentage of the loan, so the service can be presented as free; a debt adviser is paid by the borrower, openly, under an engagement letter. Neither model is dishonourable; they pay for different work. The commission rewards placing the loan and pays nothing for negotiating covenants, fees and prepayment terms. A broker matching you to a product from a panel is often the right tool for a small, standardised facility (asset finance, an invoice discounting line, a simple commercial mortgage); on a larger or more structured raise the negotiating is where the value sits. The comparison in full is our guide to debt adviser versus broker.
Whichever route you take, ask in writing who pays, how much, and on what. The arrangement to refuse, from anyone, is an undisclosed payment from the lender taken alongside a fee from you. The hub carries the short-form comparison under adviser versus commercial finance broker.
The fee is worth paying when the terms repay it several times over.
The mechanism is competitive tension. One lender gives one quote, priced in the knowledge that there is nothing to beat; two or three credible term sheets put the borrower in a market. That moves the margin and the lines borrowers rarely test alone: the arrangement fee, any original issue discount, covenant headroom, amortisation and prepayment terms. An incumbent usually re-prices once credible alternatives appear, because it can no longer treat the relationship as captive.
Do the arithmetic coldly, on your own numbers. The calculator divides the adviser’s cost by the facility and the years it is outstanding to give the margin a process has to win to pay for it. With the fee a flat percentage, that is the percentage over the years, so 1.5% over four years needs 37.5 basis points at any size; a minimum fee, a higher percentage on a small deal or a retainer paid on top raises it on a smaller facility.
The calculator starts from a worked example, an illustration and not a forecast. On a £5m facility, half a percentage point off the margin is worth £25,000 a year, or £100,000 over four years, against a success fee of £75,000 at 1.5%. That recovers the fee with a third to spare, short of the several-times test, and on a loan that amortises it may not recover it at all.
The margin a process has to win to pay for the adviser.
The guide’s example · edit any figure
The amount the success fee is charged on.
Roughly 1 to 2% of the facility at £3–15m. The percentage rises on smaller deals, usually with a minimum fee.
Enter the total retainer over the process. It is commonly credited against the success fee at close. Where a minimum fee exceeds the percentage, enter the difference here as a retainer paid on top.
The saving runs for as long as the facility does. Three to five years is a common hold.
What the process takes off the margin, against the offer you would otherwise sign. 100 basis points is one percentage point.
Anything else the process moves, such as a lower arrangement fee or discount, or an exit premium avoided.
Break-even margin improvement
37.5 basis points a year
What the process has to take off the margin on £5,000,000 over 4 years to cover a £75,000 fee.
- Adviser cost
- £75,000
- 50 basis points over 4 years
- £100,000
- Other savings
- £0
- Net: saving less cost
- £25,000
On these numbers the saving covers the fee 1.3 times. That recovers it, but falls short of the several times this guide asks for before you hire, and an amortising loan or an early refinancing would shrink it further.
An illustration of the arithmetic with your inputs, not a quote for any adviser’s fees. It does not discount, so a pound saved in year four counts the same as a fee paid at completion, and it assumes the whole balance stays outstanding for the whole period. Both assumptions flatter the saving. Calculated in your browser.
Starting values: the worked example above. Its 1.5% fee is a point inside the 1 to 2% market range, and its four years a point inside a three-to-five-year hold.
What a process moves beyond the margin goes in as other savings, such as a sharper arrangement fee or prepayment terms that do not tax an early exit. The full stack, with worked £5m and £10m examples, is in the all-in cost of raising debt.
Where the margin a process could win falls short of the break-even and nothing else in the terms makes up the difference, the adviser is not worth hiring. An adviser also carries the process off a management team that still has to run the business, and keeps an alternative warm in case the chosen lender cannot deliver at credit committee. The test is still the arithmetic, and the saving should be several multiples of the cost before you proceed.
Some raises do not need an adviser at all.
A borrower should not hire a debt adviser in three situations. In each, the margin a process could win is small against the fee, and Fig. 03 sets them out.
Three cases where the fee does not earn itself.
| Situation | What it looks like | Why the fee is wasted |
|---|---|---|
| A small, standardised facility | Asset finance, an overdraft renewal, simple invoice discounting, or a loan below roughly a million pounds | The terms are largely fixed, so the percentage would eat most of what a process won. A broker, or your own legwork, is enough. |
| A strong incumbent offering fair terms | A bank that knows the business prices the renewal as the credit it is, and a quick check against market levels confirms it | A full process adds cost and weeks for a narrow gain. Once the check comes back clean, take the renewal. |
| A clean, vanilla refinancing | A profitable business at modest leverage rolling a plain term loan it could place with any of a dozen banks | The spread between the best offer and a decent one is thin, and on a smaller facility the fee can be worth more than the spread. |
Check an incumbent’s renewal against market levels before taking it, because its first offer is written in the knowledge of whether you are shopping it. Size is a poor proxy for any of this, and the test is the saving. A £4m acquisition facility on a tight timetable, or a £5m refinancing with a covenant problem underneath it, is small in quantum and large in complexity, and is where advice earns out; a £10m vanilla refinancing from strength may not be. The hub answer on whether an adviser is worth it for a smaller raise runs the same test in shorter form.
Read the engagement letter as carefully as the term sheet.
Start with scope and the definition of completion, because they decide when the success fee is owed. The letter should say which transactions it covers (a refinancing, an acquisition facility, or any debt raised during the term), what counts as completed (signed documentation, first drawdown, or committed facilities whether or not drawn), the fee basis, and how staged or delayed drawings are treated, in terms precise enough to leave no dispute over when the fee falls due.
Exclusivity for the letter’s term is reasonable, since an adviser cannot run a credible process beside a parallel one, but the term should be finite and terminable on sensible notice. The tail, commonly twelve to twenty-four months, protects the adviser from a borrower who takes the process to the final yard and closes directly; push for it to cover only lenders the adviser introduced or engaged with on your behalf, listed by name at termination.
If the deal dies, check whether the retainer is the whole of what is owed, and whether any further abort fee falls due and when, since a borrower who withdraws is different from a market that moves. Check whether expenses are capped. Ask whether the adviser receives anything from any lender in connection with your financing; the only acceptable answers are no, or a disclosed amount fully rebated to you. Fees due whether or not a financing completes, such as a fee triggered by a term sheet you decline, and undisclosed lender payments, are the two arrangements to walk away from.
We will tell you whether a process is worth running at all.
If a raise or a refinancing is on your horizon and you are weighing whether advice would earn its fee on your numbers, a first conversation is confidential and costs nothing. We will give you a straight read on what a process could move for your facility, including where you do not need us. How a mandate runs, and how we are paid, is set out in how we work, and the full range of what we advise on in our services.
The terms in this guide
Each is defined in full in the library, with the levels and conventions that apply at £3-15m.
- Arrangement fee
The arrangement fee is what a lender charges for putting the facility in place. It is taken at drawdown, so it never reaches your account, and it varies by lender type more than by deal size.
- Broker vs adviser
A broker is paid commission by the lender that wins the deal. An adviser is paid by you. That single difference decides whose side each is on when the terms are being set.
- Debt adviser
A debt adviser runs a competitive process on the borrower's side of the table. The UK market is tiered by ticket size rather than by quality, and the tier that fits a £3-15m raise is not the one that fits £100m.
- Term sheet
A term sheet sets out the terms a lender will lend on. Most of it is not binding, a few clauses are, and your negotiating leverage peaks in the moment before you grant exclusivity.