What does a debt adviser cost, and when is one worth paying for?
Almost every debt advisory fee in the UK mid-market has the same shape: a modest retainer that pays for the work, and a success fee, paid only when the money arrives, 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 harder questions are the ones this guide is for: what that fee actually buys, how an adviser differs from a broker who appears to cost nothing, when the fee recovers itself several times over from sharper terms, and when the honest answer is that 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 starts before any lender is contacted: establishing how much debt the business can sensibly carry, what structure fits the plan, and how the credit case should be framed for the committees that will judge it. Then the materials — the financial model, the information memorandum, the data room — built to the standard a credit team can underwrite from without chasing. Then the market: identifying which lenders, across banks, specialist lenders and funds, are genuinely writing this kind of deal this quarter, approaching them in parallel, and bringing back comparable indicative terms.
The part that earns the fee comes last. With several term sheets on the table, the adviser negotiates the points that carry money over the life of the facility — margin, fees, leverage, covenants, security, prepayment terms — and then drives the chosen deal through credit approval, due diligence and legal documentation to drawdown. The analysis is necessary, but the value concentrates in two things a borrower cannot easily supply alone: a live read of lender appetite, which changes month to month, and competitive tension, which is what actually moves a term sheet. A company raises debt every few years; the adviser is in the market every week.
The shorter answer, and the questions around it, sit in the hub under what a debt adviser actually does, and the stage-by-stage shape of a mandate is set out in how we work. The rest of this page is about what that work costs, and when it is worth buying.
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 a fixed sum, paid up front or monthly over the months the process runs, that covers building the model, preparing the lender materials and running the market work. It is deliberately modest against the deal: enough to keep both sides committed, not enough to make a dead deal profitable. On most engagements it is credited in full against the success fee at completion, so a deal that closes pays the success fee once, not both.
The success fee is the larger part, payable only when the financing completes, and set as a percentage of the facilities raised. The percentage scales inversely with size, because the work does not: a £30m raise is not six times the work of a £5m one. On lower-mid-market deals of £3–15m the market range is roughly 1 to 2% of the facility; on larger mid-market raises the percentage falls below that, and on small deals it rises, usually with a minimum fee that makes the engagement viable at all. Whether the percentage applies to committed or drawn amounts is a real term, not boilerplate — a facility with a large undrawn line reads very differently under the two bases, and the engagement letter should say which applies.
Within that range, the price moves for reasons you can mostly predict. Complexity pushes it up: an acquisition against a timetable, a multi-lender structure, an intercreditor negotiation, or a credit that needs careful framing all take more senior time than a clean refinancing, and are priced accordingly. Stress pushes it up further — a covenant breach or a lender that wants out is a harder mandate than a raise from strength, and the firms that do that work well charge for it. Pulling the other way: a clean credit, a straightforward structure, a well-prepared data room and a realistic timetable. A borrower who arrives with current numbers and a sensible ask is cheaper to advise, and a good adviser will say so in the quote.
Two other provisions belong in the same conversation, and both are covered in more detail in the engagement-letter section below: abort arrangements, which set what is owed if the deal dies, and the tail, which keeps the success fee alive for a period after termination. The hub carries the short-form answer on how debt advisory fees are structured.
Who pays determines who the intermediary works for.
Both sit between a borrower and lenders, and from the outside the two can look interchangeable. The economics are not. 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 to the borrower as free. A debt adviser is retained and paid by the borrower, openly, under an engagement letter. Neither model is dishonourable, but they produce different incentives, and it is worth being clear-eyed about what each one pulls toward. A commission paid by the lender rewards placing the loan with a lender who pays commission, and pays nothing for the slow work of negotiating covenants, fees and prepayment terms once a lender is found. A fee paid by the borrower, contingent on completion, rewards getting the financing closed on terms the client accepts.
The work also differs in kind. A broker matches you to a product from a panel and introduces you; the negotiation, the materials and the process are largely yours to run. An adviser runs a structured competitive process across the market, builds the materials to underwriting standard, and negotiates the full set of terms on your side. For a small, standardised facility — asset finance, an invoice discounting line, a simple commercial mortgage — a broker is often the right tool, because the terms are largely fixed and the job really is matching. For a larger or more structured raise, where leverage, covenants, fees and documentation are all negotiable and each carries real money, the placing and the negotiating are different jobs, and the second one is where the value sits.
Whichever route you take, ask one question in writing before you start: who pays you, how much, and on what. A good broker answers it plainly, and so does a good adviser. The arrangement to refuse, from anyone, is an undisclosed payment from the lender taken alongside a fee from you — a conflict dressed up as a discount. The hub carries the short-form comparison under adviser versus commercial finance broker.
The fee is recovered from the terms, or it is not worth paying.
The mechanism is competitive tension. A borrower who approaches one lender gets one quote, priced in the knowledge that there is nothing to beat; a borrower with two or three credible term sheets on the table is negotiating against a market. That tension moves the margin, and it also moves the lines borrowers rarely test alone: the arrangement fee, any original issue discount, the covenant levels and their headroom, the amortisation profile, and the prepayment terms that decide what leaving early costs. From the lender’s side of the table, incumbent renewal terms move materially once credible alternatives appear, because the incumbent re-prices from protecting a relationship it assumed was captive.
The arithmetic is worth doing coldly, on your own numbers. On a £5m facility, a margin improvement of half a percentage point is worth £25,000 a year, or £100,000 over a four-year hold — against a success fee that, at the middle of the market range, would be in the region of £50,000 to £75,000. Add what a process moves beyond the margin, a sharper arrangement fee, a covenant package with genuine headroom, prepayment terms that do not tax an early exit, and the recovery is commonly a multiple of the fee rather than a margin over it. Interest dwarfs fees over any realistic hold: with Bank Rate held at 3.75% in June 2026, Bank of England, Bank Rate, a mid-market borrower’s all-in coupon runs from the mid-single digits on bank terms to above 10% on fund terms, so the terms that shave the running cost matter far more than the one-off cost of the process that shaves them. The full stack, with worked £5m and £10m examples, is in the all-in cost of raising debt.
Price is not the whole return. An adviser also carries the process — the questions, the diligence, the timetable — off the management team during months when the business still has to trade, and a well-run process protects against the quiet failure mode of a financing: backing a lender that cannot deliver at credit committee with no alternative kept warm. But the honest core of the case is arithmetic. Estimate what sharper pricing and better terms are worth over the life of the facility, weigh it against the fee, and only proceed if the saving is several multiples of the cost.
Sometimes the honest answer is that you should not pay for this.
The same arithmetic that makes the case for an adviser on most raises above a few million pounds makes the case against one in three situations, and any adviser paid the way we are should name them. The first is the small, standardised facility — an asset finance line, an overdraft renewal, a simple invoice discounting arrangement, or a loan below roughly a million pounds. The terms on these products are largely fixed, there is little for a process to move, and an advisory percentage would eat most of whatever it recovered. A broker, or your own legwork, is the right amount of help.
The second is a genuinely strong incumbent relationship producing genuinely fair terms. If your bank knows the business well, its renewal offer prices you as the credit you are, and a quick sanity check against market levels confirms it, a full process adds cost and weeks for a narrow gain. The check matters — a single quote is not a market, and the incumbent’s first offer is written in the knowledge of whether you are shopping it — but where the check comes back clean, take the renewal. The third is the clean, vanilla refinancing at modest leverage: a profitable business rolling a plain term loan it could place with any of a dozen banks. A competitive process still helps at the margin there, but the spread between the best offer and a decent one is thin, and on the smaller end the fee can be worth more than the spread.
Size is a poor proxy for any of this, which is why the test is the saving, not the ticket. 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 exactly where advice earns out. A £10m vanilla refi 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 actually owed. The letter should say which transactions it covers — a refinancing, an acquisition facility, or any debt raised during the term — and what counts as completed: signed documentation, first drawdown, or committed facilities whether or not drawn. It should also fix the fee basis, committed or drawn amounts, and how staged or delayed drawings are treated. Vague completion language is where fee disputes come from, and a careful adviser prefers it precise for the same reason you should.
Exclusivity and the tail come next. Most engagement letters are exclusive for their term, which is reasonable — an adviser cannot run a credible process while a parallel one runs beside it — but the term should be finite and the letter terminable on sensible notice once the initial period has run. The tail keeps the success fee payable if you complete a financing within a set period after termination, commonly twelve to twenty-four months. That protects the adviser from a borrower who takes the process to the final yard and closes directly, which is fair; a tail that captures any financing from any lender, including ones the adviser never contacted, is broader than it needs to be. Push for the tail to apply to lenders the adviser introduced or engaged with on your behalf, listed by name at termination.
Then the money if the deal dies. Abort provisions should be explicit: the retainer is normally the adviser’s compensation for a deal that does not complete, so check whether it is the whole of it, whether any further abort fee falls due, and in what circumstances — a borrower who withdraws is different from a market that moves. Check how expenses are handled and whether they are capped. And ask the alignment question directly: 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 that fall due whether or not you draw the debt, 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 the honest answer is that 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.