Guidance on ballpark legal fees on a deal in the $3M-$5M range?

searcher profile

November 13, 2024

by a searcher from University of Pennsylvania - The Wharton School in Philadelphia, PA, USA

I'm interviewing M&A attorneys and would like to hear what other searchers have paid for legal fees and if they were structured as a % of the deal size or just hourly? Thanks!

1
11
109
Replies
11
commentor profile
Reply by a searcher
from The University of Texas at Austin in Scottsdale, AZ, USA
TIP: I would be less concerned about the legal fee and much more concerned about getting the contracts done in a timely matter (easier said than done). Just keep that as your focus since your are the main person spearheading it. It can be absolutely maddening how long these documents can take even when you and the seller are on good terms (it just takes time). A business that size might be making $100k/mth...lost earnings can be more costly than the legal fees. Don't skimp here...hire a good firm/attorney that specializes in deals your size. Expect $20-$50k depending on how big a d*** the seller's counsel is....1% of EV is a pretty good back of envelope calculation, but can go much higher if there is back-and-forth among the attorneys (ie. you want an escrow holdback, seller doesn't, you have to fight for alternatives to mitigate that risk...these are the "unforeseen' things that add time and $$$ to closing). By having a good attorney you can focus more on trying to grease the skids vs a less savvy attorney where you having to make decisions on what to fight for...let them do that. It's better to be in a position where you have to tell YOUR attorney to back off...you get what you pay for.
commentor profile
Reply by an intermediary
from Indiana University at Bloomington in Carmel, IN, USA
Thanks ^redacted‌ for the tag. As Christian states, depends on a lot of factors.
The biggest factors we encounter are: quality of the LOI (if you have the business issues addressed then much easier), starting out with a Purchase Agreement template that has already been negotiated so that most points are fair to buyer and seller (if you start out with most attorney’s templates, they are usually very one sided and go back and forth 4 times on a sub paragraph to get where you should be), and lastly the seller having a business attorney who has done deals, not a personal attorney.
That being said, hourly is the only way I would go and for a normal SBA deal, our client’s usual fees are under $10k.
commentor profile
+9 more replies.
Join the discussion