Managing Diligence Cost

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by a searcher from University at Buffalo, State University of New York - School of Management
in Herndon, VA 20170, USA

1yr ago

Managing Diligence Cost

Starting DD on my 1st acquisition. My lawyer indicated, quote:
"I don’t typically do a ton of review of the documents, contracts, etc., and mostly serve as a spot checker on particular items that the client wants me to review"
Then indicated the estimated cost for his legal DD is $20K - $25K. I don't mind paying money for diligence, but I expected more legal support $20K. Is this cost reasonable for the stated level of service?

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reply by a professional 1yr ago
from Bentley College in Miami, FL, USA

Broadly speaking, here are the all-in legal fees that you should expect to pay:

- $500k to $1M EV: $8k to $12k
- $1M to $2M EV: $10k to $15k
- $2M to $5M EV: $15k to $25k

This is for a standard transaction, basic searcher deal, working with an independent M&A attorney or boutique firm. Not talking about real estate, investor documents, labor unions, regulated industry, etc.

reply by a searcher 1yr ago
from Western State University College of Law in Calcutta, OH 43920, USA

It largely depends on the firm. If you are dealing with a lawyer from an AmLaw 50 firm, they can charge upwards of $1,500-$2k/hr++. I would recommend finding an attorney from a smaller firm if it is a smaller (less than $5M) deal.