Category Archives for "Selling Businesses – Legal Matters and Contracts"
Shareholder Disputes – How To Resolve Them If You Want To Sell Your Business What if all the shareholders are not in agreement with respect the sale of the business (or the valuation)? Unknown to most business owners, a minority shareholder can hold up a deal as buyers do not want to get involved in […]Continue reading
How To Successfully Sell An Insolvent Business The latest figures released by the Insolvency Service for the first quarter of the year show that corporate insolvencies rose 4.5% compared with the final quarter of 2016, and were 5.3% higher than the same quarter last year. The official figures also indicate that Q1 2017 was the […]Continue reading
Asset Sale Vs Share Sale: Does Selling Assets Get A Better Price Than Selling Shares? If a business is a Ltd company, the sale can be structured in one of two ways – by selling the shares or selling the assets. (This doesn’t apply to sole proprietorships or partnerships as these businesses don’t have shares.)While […]Continue reading
A Detailed Guide To Selling A Business By Yourself & Doing A Better Job Than A Business Broker WouldEverything you need to know about selling a business but which no business broker will tell you. By Clinton Lee (LinkedIn profile) There are two ways to sell a business: 1. The Easy Way: This is the approach […]Continue reading
Save thousands of pounds – motivate business brokers to do a better job at a lower price It’s not cheap to hire a competent business broker (business transfer agent) to sell your business. In fact, it’ll cost you between 5% – 10% of your selling price (read more about business broker costs & fees). Yes, […]Continue reading
How much do business brokers charge? Fees, charges, commission?Note: Subscription may be required to read some parts of this article. Subscription is free. A quick overviewThe short answer is that you’ll usually end up paying a commission of around 8%-10% of the price at which they list/sell your business. We’ve seen outlier prices of 3% […]Continue reading
Top broker sharp practices that business sellers need to watch out forNote: Subscription may be required to read some parts of this article. Subscription is free. If you’re selling a business and intend using a broker, you need to know that not all you see in the press about brokers & Business Transfer Agents is […]Continue reading
Keeping confidential the impending sale of your business Part 3 of 3: << Part 2 THE CONFIDENTIALITY RISK (Part III of III) The Immediate Risk For YouBusinesses that provide vendors with exit related services stand to gain from knowing, before other firms do, that you’re in need of their services.They can then get in there […]Continue reading
Keeping confidential the impending sale of your business Part 2 of 3: << Part 1 THE CONFIDENTIALITY RISK (Part II of III) Precautions That Technology Has Forced On UsHitherto cutting edge advice on, for example, picking up answerphone messages before staff do and moving the fax machine into our private office are hopelessly outdated.To protect […]Continue reading
You’ve told nobody about the impending sale of your business, not even your partner / spouse. You think nobody knows? You’re probably wrong. What’s worse is that these people who’ve been spying on you are extremely dangerous and can severely damage the value you’ve built in your business. THE CONFIDENTIALITY RISK (Part I of III) […]Continue reading
Extensive research has been done into fees at the upper end of the spectrum - covering mid-market and upper mid-market businesses (firms with Enterprise Value or Turnover from £10 million to £200 million). However, most of that research is US based.
For those who may be interested, we reproduce some of it below with links.
In 2016, Firmex and Divestopedia partnered to provide transparency into M&A fee structures within North America.
Their survey ran from August through to the middle of October 2016 with 320 responses. Nearly two-thirds of respondents (211) listed their occupation as Investment Banker or M&A Advisor, which stood out by far as the largest group at 65.9%. In comparison, the next-largest categories were a Business Broker, at 10.6%, and Business Development roles at 7.2%.
9.5% of the firms surveyed said that their minimum deals size was $50 million. The majority (56.4%) said that their minimum deal size was $5 million.
The vast majority of firms charged an engagement fee and only 8.5% didn't. 46.4% had a fixed size engagement fee, paid in one instalment while 37.9% had a monthly engagement fee. A small percentage (7.1%) charged by the hour.
Of those charging a fixed fee, 61.3% had an engagement fee of over $30,000.
Success fee: 37.4% of respondents used a simple percentage calculation. 36.5% used a scaled percent formula; 25.6% utilized the Lehman or similar formula.
Summary: "...the average small firm, that is, with a market cap of $5 million should be prepared to have to pay a closing fee of approximately $225,000, on average, to its deal advisors. Similarly, a $20 million sale price will cost an average of $665,000 in success fees alone, while a $50 million company would be charged $1.3 million,based on the fee structures given in the responses..."
The full report is a PDF that can be downloaded from here.