Any M&A specialists in here?

When one business acquires another, I assume there are closing costs, bank fees, etc. Who pays what? And are they flat dollar amounts, or percentages of the acquisition price?

I know some people I can put you in touch with. PM me if you want me to get you connected.

In reply to AngryCorvair (Forum Supporter) :

Super wide range of answers, largely depending on the size of business, type of business, and type of transaction. If the amount if under maybe 3M a local business broker is a good resource, if it's over then I think you're in banker land...

In reply to cdowd (Forum Supporter) :

I'm not a decision-maker in the process, I'm just trying to ballpark the numbers I should put in my spreadsheet. I'm currently estimating expenses at 10%.

Depending on the complexity of the business, the due dilligence work by lawyers and accountants can also cost a pretty penny, especially if the acquirer doesn't have those on staff.

Hypothetically, consider the acquirer to be a multi-billion $ medical device company who is staffed with a M&A department and all the disciplines that entails. Also hypothetically, this company would be acquiring 100% of a much smaller company, somewhere south of $200M.

The actual transaction is probably the least of your worries. 

Spend more on making sure your IP isn't stolen and your time isn't wasted during the months/years of "due diligence".

So congratulations on your upcoming retirement?  :)

@robbie, that is good advice. Our IP is well protected

@alfa, nope, I don't own enough of it to let me retire yet, but for sure in 4-5 years.

I cant say much, but the one I was involved in with numbers similar to the ones you noted, the buyer offered an amount based on EBITDA given to them and they covered everything. 

Once papers where signed (nda, etc) due diligence started. This is when you lower your pants and let them look everywhere and beyond. They brought in KPMG and we spent six months going back and forth and drilling into everything. Parallel to that, they had another company, Ramboll, doing all the enviromental studies. 

You will never talk to this many attorneys for the rest of your life. Quite stressful process. 

At the end you get paid a percentage, and an escrow account is opened with the rest of the funds in order to cover things that were missed. 


 

In reply to Slippery :

Thanks for sharing that perspective, I appreciate it! Fortunately we are not a very complex company. 1 location, a few traveling sales / support folks, not a large staff. We make 3 variants of 1 basic product. All are covered by a library of robust patents. Customer base rapidly growing. I'm letting it distract me way more than I should.