Selling a business can be a complicated process and business owners need to understand the hidden costs associated with the sale. One of the most important aspects to consider is commissions, which are typically charged at 8% to 12% for businesses priced under £1 million. This means that for every £100,000 you receive in your sale, you could be giving away up to £12,000 in commission fees. Furthermore, 90% of business owners’ net worth is tied up in their business so that means it’s very possible to give away 10% of your total net worth in fees and commissions when selling your business.
Types of Commissions & Fees
When selling a business there are several types of fees and commissions that you may have to pay out. These include broker fees, due diligence costs, legal fees, accounting fees and closing costs. Banks often charge the highest percentage – typically around 6-7%. Brokers generally charge lower rates – usually 3-4%, but this can vary depending on the size of your transaction. You will also have to pay out due diligence costs which generally range from 1-3%, legal fees which are typically 1-2%, accounting fees for tax advice at around 1-2%, and then closing costs including escrow services and other administrative tasks which can add another 1-2%.
Negotiating Fees & Commissions
It’s important for business owners to remember that these fee percentages are just estimates – they can be negotiated based on the size of the transaction or other factors such as how long it takes for the deal to close or whether there is any risk associated with it. In some cases you may even be able to negotiate with brokers or consultants who offer reduced rates based on performance incentives or because they want repeat customers if they help you successfully exit your company. Alternatively, you could prefer to sell directly to Your Acquisition Partner so that we can ensure that the value created by the exiting owner isn’t diluted by hefty commission charges.
The cost of selling a business can be expensive if you don’t plan ahead and consider all potential costs involved in the process. Commission rates usually range from 8%-12% for businesses priced under £1 million; however, there are also additional professional fees like due diligence costs, legal fees, accounting fees and closing costs that can add up quickly. It’s important to educate yourself about these hidden costs before beginning the process so that you know what to expect when it comes time to sell your business. Negotiate where possible so that you get the best deal and make sure not to give away more than necessary in commissions or professional agreement terms so as not leave money on the table at closing time. Your Acquisition Partner only deals directly with the business owners when selling the business thus, cutting out all the brokers fees so contact us today and see how we can save you money by selling to us.