How much will it cost to sell my business?

How much will it cost to sell my business?

If you have been considering the sale of your business for some time, you may have considered some of the questions we have written articles about over the last few months:

Planning the sale of your business and what questions to ask your accountant and wealth advisor?

What would you do if you did not have to run your business?

What are the options for business owners when you wish to retire?

How prospective buyers will value your business?

What is the impact of the CGT Rate Increase on Business Asset Disposal Relief (BADR)?

 

You are almost there but this is one last question: How much will it cost to sell my business?

Firstly, you need to consider who will be on your exit team? This may vary, but generally you will need help from:

 

Your Accountant

  • To make sure the company’s latest financial performance is well documented and up to date
  • For tax advice according to your specific situation
  • To assist with responding to questions which arise during the buyer’s Due Diligence

 

Commercial lawyer

  • To draw up contracts once a deal has been agreed. These include Share/Asset Purchase agreements, Consultancy Agreements, Property Sale or Lease Agreements.
  • To assist with responding to questions which arise during the buyer’s Due Diligence

 

Business broker

  • To provide an indication of the value the business to help set expectations and define your exit strategy
  • To find the right buyers and negotiate the best deal
  • To manage the process and all parties involved

Your accountancy costs will vary according to the work required to prepare regular management accounts and respond to a buyer’s or business broker’s queries. If your management accounting systems are well oiled already, then the additional costs from your accountant will be somewhat less. Depending on the complexity of the deal or indeed your own internal structures they will need to be more or less involved in the process. We advise you to speak with your accountant well ahead of putting your business on the market so that you and they are well prepared.

Sellers of businesses often select their commercial lawyer once they reach Heads of Terms with a buyer (see the Selling Process) which is the stage when you have a deal agreed in principle subject to Due Diligence and drawing up of contracts. The Heads of Terms are often used as a baseline for lawyer to quote for the work. See also our article on how to select a commercial lawyer and keep costs down. Costs again will depend on the complexity of the deal and your own company holdings. In our experience, simple deals can often be done for £10k to £15k. Normally we find they fall in the £20k to £30k bracket for sale in the range of £2m to £5m. More for larger deals of course.

Business Broker fees can vary substantially from one to another. Some offer no sale no fee arrangements but with fees in the 7% to 11% range, some charge a not insignificant amount upfront £10k to £30k but with a lower percentage on completion in the region of 3%. Others, like Hornblower, charge a lower commitment fee on engagement and heads of terms, with a success fee on completion which is somewhere between.

We hope that gives some good guidance. At Hornblower, we are always happy to discuss your plans for the future, looking at all the options for your exit as well as providing a free indicative valuation. Whilst our business is about selling businesses, we help you decide whether a business sale is right for you and your business before you engage us. Do get in touch to arrange a chat.

Has this article been helpful? Would you like to find out more?

    Has this article been helpful? Would you like to find out more?

    Contact us