5M.
These are not minor deductions; they are significant cash outflows that determine your net proceeds. The good news is they are predictable. This guide breaks down every line item, from the obvious to the non-obvious, so you can model your exit accurately and avoid expensive surprises.
The Biggest Check You’ll Write: Your M&A Advisor
The single largest expense, by far, will be the fee you pay the M&A advisor or investment banker who runs your sale process. A great advisor doesn't just run a process; they create the market that gets you the best possible price and terms. A mediocre one can leave millions on the table. This is not the place to be penny-wise and pound-foolish.
How M&A Advisor Fees Work
Most M&A advisory engagement letters have two core components:
1. The Monthly Retainer: A fixed fee paid during the 6-12 month sale process. This covers the significant upfront work of building the financial model, writing the Confidential Information Memorandum (CIM), developing buyer lists, and managing initial outreach. It ensures the bank is compensated for their time, even if a deal doesn't close.
- Typical Cost:
0,000 -
5,000 per month. - Founder Tip: The retainer should always be 100% creditable against the success fee at closing. If you paid $75,000 in retainers and the calculated success fee is $600,000, you should only pay an additional $525,000 at close. If a bank argues this point, it's a red flag.
2. The Success Fee: The majority of the compensation, paid only if and when the deal closes. This is almost always calculated as a percentage of the total enterprise value.
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