M&A Service Fees for Selling Private Companies
Selling a private company through M&A involves fees for the investment bank or advisory firm that shepherds you through the process. These fees are typically structured in two parts:
1. Retainer Fees: This is an upfront fee, a fixed amount paid to the advisor to secure their services. It ensures your commitment to the sale and covers some of their initial work. Retainer fees can be a one-time payment or spread out monthly. The cost varies based on the firm and the complexity of the sale, but generally falls within these ranges based on EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization):
Under $1 million EBITDA: $45,000 - $55,000
$1 million - $10 million EBITDA: $56,000 - $80,000
$10 million - $30 million EBITDA: $81,000 - $110,000
$30 million - $50 million EBITDA: $111,000 - $130,000
Over $50 million EBITDA: $131,000+
2. Success Fees: This is the bigger payout for the advisor, contingent on a successful sale. There are several ways to structure success fees:
Percentage of Deal Value: A common approach, with a percentage of the final sale price going to the advisor. This percentage generally decreases as the deal size increases. Here's a rough guide:
$5 million - $10 million deals: 4% - 5.9%
$20 million - $50 million deals: 2% - 3.9%
Over $100 million deals: 1% - 1.9%
Fixed Success Fee: A pre-determined dollar amount paid upon closing, typically used for smaller deals requiring less work from the advisor.
Scaled Success Fee: A success fee that changes based on the final sale price. It could be a tiered system with higher percentages for exceeding a target price or a declining percentage for lower sale prices.
M&A fees are negotiable, and the specific structure can be tailored to your situation. Be sure to discuss fee structures upfront with potential advisors and compare offers before making a decision.
How Gold House M&A can Help
Here's how Gold House M&A can help you with selling your private company through an M&A transaction:
Expertise in the Sale Process:
Navigation: M&A deals can be complex, with a lot of moving parts. Gold House M&A will have the experience to guide you through the entire process, from initial preparation to closing the deal.
Valuation: We can help you determine a fair market value for your company, ensuring you don't leave money on the table.
Marketing & Deal Sourcing: We'll leverage our network to find suitable strategic or financial buyers interested in your company.
Negotiation: Our expertise can be crucial in negotiating the best possible terms for your sale.
Increased Efficiency and Value:
Time Saving: By handling the complexities of the M&A process, Gold House M&A can free up your time to focus on running your business.
Access to Network: We can connect you with potential buyers you wouldn't have access to on your own.
Competitive Offers: Our negotiation skills can help you secure a higher sale price.
Additional Services (offered by Gold House M&A):
Due Diligence Support: We can assist you in preparing for the buyer's due diligence process, where your company's financial and legal records will be scrutinized.
Post-Merger Integration: In some cases, we provide guidance on integrating your company with the buyer's organization.
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