How Much Does it Cost to Sell My Business?
I previously covered the different ways of how to sell your business. If you missed it, you can read it here.
The total cost will depend on whether you sell your business through your personal network, online, or through a broker.
1. Selling your business by yourself
a. Personal Network
Estimated Cost Breakdown:
- Legal Fees: $10-150K
If you are selling your business to a family member, friend, employee, or through your personal network, oftentimes, the only fees you are paying are legal fees. Regardless of whether you use a broker or not, you should always use a legal advisor to ensure you have the proper documentation. Legal fees can vary based on the deal size, complexity, and experience of your legal advisor. For example, a legal advisor who specializes in M&A advisory is going to cost more than your local attorney. You get what you pay for, and I recommend not choosing the cheapest option when hiring an attorney.
b. Online
Estimated Cost Breakdown:
- Legal Fees: $10-150K
- Online Listing Fee: $50/month
- Online Transaction Fee: 1-10% fee on the total sale transaction price
If you are a small business that doesn’t have someone in your personal network who wants to buy your business, and you aren’t quite at the financial size where it makes sense to use a broker, then selling your business online might make sense. There are several websites where you can list your business for a monthly listing fee. These websites also charge a transaction fee based on the total sale price.
2. Selling your business through a broker
Estimated Cost Breakdown:
- Legal Fees: $10-350K
- Retainer Fee: $10-150K
- Transaction Fee: 3-10% fee on the total sale transaction price, often with set minimum fees
Similar to legal advisors, the range of fees between brokers can vary greatly. At the cheaper end of the spectrum, you can find licensed brokers who will reach out to their network to see if they can find someone who will buy your business. At the more expensive levels, you are working with experienced investment bankers with more of a track record. If you engage with an investment bank, they will spend hundreds of hours helping you through the sale process. This includes preparing marketing materials, reaching out to investors, and advising you through the sale process. A good broker can add significant value by maximizing the sale price of your business through a well-run competitive process.
If you are interested in learning more about selling your business, I cover other topics here in more detail:
