When selling a business, many owners are surprised by the various costs that come into play. These expenses are essential to navigate the sale successfully and can affect the final payout. Understanding the associated costs is critical for proper planning and success of selling a business, and thus, why I decided to write a small post on this topic.
For example, let’s consider a fictitious business owner, Sarah, who is selling her small manufacturing company valued at $2 million. First, she will need to hire a business broker, whose fees typically range from 8-12% of the final sale price. This fee covers the broker’s role in marketing the business, identifying potential buyers, negotiating terms etc.
Next, legal fees come into play. Hiring an experienced attorney is crucial to ensuring the deal is structured correctly and that Sarah’s interests are protected. Legal fees for a business sale can vary, but they generally range from $5,000 to $25,000, depending on the complexity of the deal. Sarah’s deal might involve asset transfers, intellectual property, and employment agreements, so she could expect to pay closer to the higher end of that range.
Additionally, Sarah might incur accounting fees. A professional accountant will ensure her financials are accurate, provide guidance on tax implications, and possibly assist in due diligence. These fees can range from $3,000 to $15,000, depending on the business’s financial complexity.
Lastly, there may be costs related to transferring licenses, permits, or leases. These often vary by industry, but they can add a few thousand dollars more.
Selling a business like Sarah’s involves significant upfront costs, but these expenses are essential to closing a successful deal while protecting her interests.
