How Much Does it Cost to Sell a Business

3057368127_4041af864c

 

In this article we want to give an idea of the costs involved when selling a business in Europe. So how much does it cost to sell a business? To answer this we will not only be focusing in the out of pocket costs but also give you a broader perspective, on the overall costs including the additional costs that occur after the sale. When you sell a company you are selling years of your own dedication and hard work. Hence this decision is an important one and should be executed properly.

 

What are the Costs for selling a Business? (Preparation)

In order to better control and reduce costs, good preparation is necessary. Having not done proper preparation will result in a longer sale process which wastes valuable time and money. Idealy the preparation to sell a company starts early sometimes years in advance. For a further in depth look please read how to prepare to sell a business for sale.

 

What are the Costs for selling a Business? (Knowing the reason for the sale)

There can be many reasons for selling your company. For example, retirement, wanting to do other activities or the economies gained from a sale are needed for your business to survive. Knowing the reason for selling your company will let us better understand what sales strategy to implement. Knowing the sales strategy will give us a better idea of what is the total cost to sell a business will be.

 

What Are My Alternatives?

Alternative 1 – Sell your company yourself

This is a viable option if you feel you are equipped and experienced enough to do it yourself. If you are considering handling the sale your company yourself make sure you possess the necessary foresight required for the sales procedure. For example, there have been many cases when the seller spent a great deal of time and money to sell his company and when it came down to agreeing on terms with the buyer, the deal fell through.

Another of the downsides to approaching a sale this way is anonymity. When you approach potential buyers they are going to know who you are and what you selling.

The bottom line is, When you need your kitchen sink repaired do you call an electrician? There isn’t much room for mistakes when working in M&A. (mistakes cost time and money).
Some costs to consider before Selling your Business Yourself are:

  • Cost of Travel ( Air tickets and accommodation )
  • Cost of the Time spent ( your personal expenses )
  • Cost of Legal Documents (Lawyers)
  • Cost of Valuations/ Forensic Accounting (accountants)
  • Cost of Mistakes ( only time can tell )
  • Company Expenses ( Support Staff )

 

Alternative 2 – Get a M&A adviser /Broker

Getting a Broker or M&A adviser will cost you a retainer. This option does cost money but also reduces the risk of losing more money further down the line. Having a broker will provide you with additional security by limiting your exposure to the right buyers as well as give you anonymity when possible buyers are approached.
Competitors do at times pretend to be interested in a purchase but are really just after information.

Having a broker will provide you with additional security by bringing proposals to the right buyers and away from undesirables. Having an M&A advisor will help you focus on your company’s health rather than its sale. More often a deal hasn’t gone though because the seller took his eye of the ball and his company depreciated while he was focused on the sale.

When working with C.R.E.P. you will be getting a full team behind the sale of your company. We get you to the right people and handle all phases involved in the sale of a business or property. For better idea of the different phases of selling a business please read The Process involved in selling a business or property.

 

Option 1-Performance Based

Should you want us to actively search and find real buyers. For Example, buyers that have something to gain by acquiring your company such as possible synergies. We will require a retainer this retainer will include all aspects of the sales process. As well as handle all the procedures involved in selling your business.
This option will cost

  • 10 000€ commitment fee, for the company’s documentation
  • 4 000€ for Office Costs
  • A success fee of 2,5% of the total sell price

This includes:

 

Option 2- Associated Services

 

Also read Associate services to learn how we can help you.
The Cost of this option will vary depending on what your needs are.

 

Feel free to contact us for a Quote.

 

Option 3- Subscription Plan

For 5 months,at a minimum 3 times a week, our team focuses on the sale of your company. This includes M&A advisor and Support Staff.
Cost:

  • €1500 a Month averaging on 3 days a week.
  • €4000 for office costs
  • 2,5% succession fee of the total sell price

Feel free to contact us for a Quote.

 

Option 4- By the Hour

You may also pay by the hour. This includes M&A advisor, Legal services, Accounting services and Support Staff all by the hour. The price per hour will vary depending on how many professionals are working on the project.
Costs:

  • €2000 office costs upfront
  • 95€ to 495€ an hour sold in segments of 4 to 8 hours
  • Success Fee on 1% if agreed 

 

Feel free to contact us for a Quote.

 

Option 5- Lehman Formula

Should you not want to pay any retainer. We can take a look at your company and consider adding it to our database as an option to present to possible buyers and investors. This will cost you in the form of a commission once the sale goes through.

 

  • 5% commission on the first million
  • 4% commission on the second million
  • 3% commission on the third million
  • 2% commission on the fourth million
  • 1% commission on anything over four million

 

Feel free to contact us for more information.