What It Costs to Sell a Business
Broker commissions, legal fees, taxes, and the other costs of selling a business. What you will pay, and what you will actually net.
When an owner asks what it costs to sell their business, they are usually thinking about the broker’s fee, while there are likely other fees that a seller will encounter during the process.
While a broker’s commission or success fee is a transaction cost among other costs, many sellers don’t recognize that the larger cost of selling a business is not the commission. It’s the money left on the table when the sale is handled poorly, the business is undervalued, or the seller agrees to unfavorable financing terms.
Success fees
Expect total transaction costs of roughly 10–15% of the sale price in fees. Broker commission runs about 10% on smaller Main Street deals and scales down as deal size rises. Legal fees typically land in the low-to-mid five figures.
The breakdown
| Cost | Typical range | When it is paid |
|---|---|---|
| Broker success fee | ~10% on Main Street, scaling down on larger deals | Deposit, then the majority paid at closing |
| Transaction attorney | Low to mid five figures | Deposit and then through the process |
| CPA / tax planning | Low four to five figures | Before and during |
| Preparation costs | Varies | Before listing |
| Taxes | Often the largest single expense | After closing |
Broker or advisor commission
Most brokers work on a success fee: a percentage of the sale price, paid when the deal closes.
Many advisors charge a modest upfront retainer. Some brokers charge a monthly work fee on larger engagements, credited against the success fee at closing, to cover the ongoing cost of preparing and marketing a business.
It’s important to note that a well-run process typically raises the sale price by more than the final success fee of a poorly managed transaction. Negotiating by yourself against a buyer who acquires businesses for a living is a huge disadvantage for a seller. For more on what a broker does through the process, see how we work.
Legal fees
You will need a transaction attorney who has experience in business sale transactions, not the general counsel who handles your estate, your will, or collections. They draft or review the purchase agreement and cover representations, warranties, and indemnification, which set out who is responsible if something turns out to be wrong after closing.
Straightforward deals land in the low to mid five figures. Real estate, multiple entities, or a complicated corporate history will cost more. Complexity drives the fee more than the hourly rate does.
Accounting and tax advice
Bring in a CPA to produce clean financials and model your tax outcome. What you owe depends on how the deal is structured, and the difference between a well-structured sale and a careless one can be significant.
Taxes
For most sellers, taxes are larger than all of the fees combined.
Most small business sales are asset sales, where the buyer purchases the assets rather than the company’s stock. How the purchase price is allocated across those assets, some to equipment, some to goodwill, some to inventory, changes what you and the buyer each owe.
That allocation is negotiated and it has real dollars attached. An advisor and a CPA working together can often improve your after-tax result without changing the headline price. What is left after those costs is defined under net proceeds.
Bring your accountant in before the deal is structured rather than after.
Costs that are easy to overlook
- Preparation. Cleaning up books, resolving lease or legal issues, and reducing owner dependence all take time, and often money, before the business is listed.
- Proceeds that arrive later. If your deal includes a seller note or an earnout, part of your money comes over time and carries risk. It is not a fee, but it changes what you actually receive and when.
- A deal that falls apart. A sale that collapses in due diligence costs months and the fees already spent, and the business can be harder to remarket afterward.
What you actually net
Take the sale price. Subtract the success fee, legal and accounting costs, and your taxes. Then account for any portion paid over time rather than at closing. What remains is the number to plan around.
A lower headline price with a clean structure and a lower tax bill can leave a seller with more than a higher price that is largely seller financed. The structure and the price are negotiated together, and they are worth evaluating together.
If you want to understand what your business would realistically sell for and what you would keep after costs, reach out.
Mark Herrmann is the founder of Trustmark Mergers & Acquisitions in Charlotte, North Carolina. This article is general information, not legal, tax, or financial advice.
- IBBA & M&A Source Market Pulse