be very expensive transactions. They take time away from you to run the business and also cost money because you need to employ the services of specialist advisers who are there to make money by guiding you through a process, and you’ll also have to pay other transaction fees as money actually changes hands. The advisers will cost more money if you are unprepared simply because there is more work for them to do. You will also not know enough when being taken advantage of.
The more preparation you can do in advance, the lower your transaction costs will be both in terms of distractions and advisory fees paid. From an advisory perspective, the amount of work done to conclude a deal in the $1m range is not very different to that of a $100m deal, so advisers will charge a much higher percentage fee for smaller deals. Research I’ve seen suggests that smaller businesses pay total transaction costs of up to 25% of t he deal for deals under $500 000, whereas total costs on a $100m
deal are more likely 2%.