The Modified Lehman and Double Lehman are the fee formulas Australian M&A advisors use to calculate what a seller owes them on completion of a sale. They charge a high percentage on the first slice of deal value and a smaller percentage on each slice after that.
Technically, both are variations on the original Lehman scale developed by Lehman Brothers in the late 1960s. “Modified Lehman” is a general label for any variant; “Double Lehman” specifically doubles the rates of the original.
A typical Double Lehman charges 10% on the first $1M of transaction value, 8% on the second, 6% on the third, 4% on the fourth, and 2% on everything thereafter. On a $15M deal, that comes to $500,000.
The formula is presented to sellers as a market standard. It is not. There is no canonical Modified Lehman. The rates and tier sizes inside it are advisor-specific and negotiable on every engagement. Two firms can quote “Modified Lehman” and produce materially different fees on the same deal.
Most engagement letters also include a minimum success fee that applies regardless of where the sale price lands. On smaller deals this is the place the formula stops being a formula and becomes a floor.
What you as a seller should ask before signing an engagement letter: what are the exact tier sizes and rates, what is the minimum, does the retainer credit against the success fee, and is the fee calculated on enterprise value or equity value (the latter is meaningfully lower if the buyer assumes debt).