![]() On the other hand, if the deal is quite larger, say upwards of $25 million the percentage is about 2-4%. The larger the deal, the smaller the percentage changed.įor instance, if a deal is less than $5 million the percentage typically ranges from 10-12%. On top of these retainers companies need to be prepared for success fees which are dependent upon the deal size. On a more granular level you might still be wondering “ so how much do M&A advisors really cost?” Retainers will often be about $50,000-$200,000. The best policy is to assess what value a banker can bring to your deal and whether that warrants the extra cost. You can already see why these fees attract so much attention. Then, there’s the commission, which is typically an additional five percent of the total fees paid on the buyer side. If you’ve already identified a business that you want to acquire, it may be that you don’t even need to avail of the services of an intermediary.īankers typically charge a retainer fee, which will be a few thousand dollars per month at the lower end. The bigger your company, the bigger the cost. Rebranding costs: Small companies can spend between $100-$200K on a good quality rebranding.Debt servicing: Debt servicing is one of the easier costs to budget for - with the total outlay being a product of the interest rate and capital provided by the lender.As redundancy costs are one to two weeks of every year served, this then becomes a relatively simple task of multiplication. HR costs: The big costs here are in terms of redundancies of the people you’ve identified as being surplus to requirements at the due diligence phase.IT & Technology costs: Assuming that you will need an IT system integration with the acquired firm, and this will include materials, software licences, installations, and more, we believe you should budget for at least $100K here.Do not attempt to undertake integration advisory without outside help if you’ve never completed an integration before. Integration advisory fees: Integration advisory typically costs between 2% and 6% of the deal value.Good negotiation should allow you to see this figure reduced, but some costs here are inevitable. Breakage fees: As outlined below, breakage fees can typically take between 5% and 10% of the total deal value.Budget around $100K at the low end and up to $250K, depending on the size of the deal. The number of hours needed to process everything is considerable. Legal fees: Even with a talented legal counsel, the paperwork can add up quickly during the M&A process.but budget for $25K for most low middle market deals. Deal-related costs: This cost will vary to a great extent on the complexity of the deal - travel costs required, interpreters, intellectual property valuation, industry experts, etc.The retainer fee is usually a few thousand dollars a month, while the commission fee can be anywhere between 2% and 10% of the fee agreed (see details below). M&A Advisor Fees: There are typically two components: A retainer fee and a sales commission fee. ![]() When planning your next transaction, be sure to make a rough estimate about each one as you go.īy doing so, you’re effectively undertaking a cost-benefit analysis of the deal, allowing you to see whether it will generate value or not.Īt DealRoom we help many companies organize their M&A process and below we provide a comprehensive overview of traditional merger and acquisition costs. So it’s highly important for anyone entering a transaction to have a good handle on costs before they arise, to ensure that you can minimize them when they do.Ĭlearly, the extent to which each of the following M&A fees will impact your deal depends on the nature of the deal, but it’s reasonable to expect nearly all, if not all, of them to arrive at some stage of any business acquisition. Value creation in M&A is as much about cost reduction as income generation. The fact that many M&A guides refer to all-encompassing ‘ M&A pre-transaction costs’ and ‘ M&A post-transaction costs’ is a testament to this. One-off costs are regularly overlooked in the M&A process.
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