Should I Pay Upfront Fees to Sell My Business?

Bill

Bill Grunau

Owner Contacting Business Broker To Sell My Construction Company

The short answer is NO!  At Pacific Business Sales we do not charge any upfront fees on transactions less than $25 million in revenue.  We prepare a comprehensive free Market Value Analysis for each of our prospective clients before we list the business for sale. 

Most Business Brokers do not charge upfront fees to sell small to midsize businesses up to $25 million in revenue, however, some will charge an upfront fee for a business valuation or marketing fee.  When considering the sale of your business and the Business Broker to represent you make sure you ask about upfront fees and if they charge for their Market Value Analysis or any other fees upfront. These upfront fees charged by some Business Brokers are paid by you regardless of whether they sell your business or not and are in addition to their commission.  

On larger transactions for companies with over $25 million annual sales, it is more common for the Broker or M&A firm to charge an upfront fee for a business valuation and preparation of the Offering Memorandum.  

Generally speaking, you should not pay any upfront fees for the sale of your small to midsize business.   Our commission is paid at the close of escrow from the Seller’s proceeds.  

We also prepare a comprehensive Confidential Information Memorandum (CIM) for each business we represent. We have spent time developing a marketing and selling process that works and derives the highest value for your business.  These are the initial steps in selling your business.  

What Fees and Costs are Involved in the Sale of a Business 

  1. Broker Commission at closing 
  2. Escrow fees split with Buyer
  3. Your advisors (CPA and attorney if used)
  4. Pay off business liabilities at closing (as specified in the purchase agreement)
  5. Federal and State taxes (paid on next tax return, review this with your tax advisor or ask to speak with our Tax Strategy CPA)
Bill Grunau

About the Author

Bill Grunau

Bill has over 20 years of experience as a Business Broker specializing in industries ranging from manufacturing to construction/contractors, technology and software, B2B services, distribution-3PL, and healthcare. His transaction experience includes successfully closed transactions as both stock sales and asset sales including transactions with licensing such as contractors, healthcare, and companies with government contracts in Orange County and other Southern California locations. Bill works closely with a team of financial advisors specializing in tax strategies to minimize taxes on the sale of a business and are available to advise clients on how to minimize the tax liability on the sale of their business. Bill is the author of “Own Your Future, Straight Talk about How to Buy a Business and Build Your Future” Bill has a BS in Electrical & Electronic Engineering studying at Cal Poly Pomona and West Coast University and also studied at Claremont Graduate school EMBA program.