It is one of the first questions owners ask, and one of the last they get a straight answer to. The cost of selling a company is usually lower than owners fear and far less important than what a well-run process delivers — but it should be understood in full, and in writing, before any mandate is signed.
What you are actually paying for
A sale has two kinds of cost: the adviser who runs the process, and the specialists who make the transaction legally and financially sound. The first is largely success-based, so most of it is only paid if the deal completes. The second is incurred regardless — which is why sequencing the work properly matters.
The adviser’s fee: retainer and success fee
M&A advisory fees are almost always split into a retainer and a success fee. The retainer is a modest monthly or upfront amount that funds the preparation phase — financial analysis, valuation, marketing materials, buyer mapping — and signals commitment on both sides. In most mandates it is credited against the success fee at completion.
The success fee is the substance of the arrangement: a percentage of transaction value, payable only when the deal closes. It is what aligns the adviser with the seller — the adviser is paid for a completed transaction at the best achievable price, not for activity.
How large is a success fee?
Success fees move inversely to deal size. A EUR 5 million sale requires much the same work as a EUR 50 million one, so smaller transactions carry a higher percentage. In the mid-market, success fees commonly fall in the low-to-mid single-digit percentage range, tapering towards one to two per cent on larger deals. Many mandates add an incentive tier — a higher rate on value achieved above an agreed threshold — which rewards the adviser precisely for the outperformance the seller cares about.
The other costs of a transaction
- Legal counsel — negotiating the sale and purchase agreement, corporate housekeeping and regulatory clearances; typically the second-largest line item.
- Financial and tax due diligence, or vendor due diligence prepared on the seller’s side to pre-empt buyer findings.
- Accounting or audit work to bring historic financials to a standard buyers will accept.
- Practical process costs — the virtual data room, translation of documents, notary and registration fees.
- Merger control filing fees where the transaction requires competition clearance.
Why the cheapest adviser is rarely the cheapest outcome
The difference between two fee quotes is usually a fraction of a percentage point of transaction value. The difference between a process with three credible bidders and a process with one is frequently ten to thirty per cent of the price — and the terms behind the headline number, where value quietly leaks through warranties, escrow and working capital adjustments. Fees are worth negotiating; they are not worth optimising at the expense of process quality.
How to keep costs under control
Agree the whole fee structure at the outset, in writing: how transaction value is defined (cash, debt, earn-out and deferred consideration all matter), what expenses are recoverable and whether they are capped, and the length of the tail period after termination. Scope legal work in phases rather than open-ended. Above all, prepare early — the single biggest driver of transaction cost is not the fee schedule but delay, and delay comes from documents that were never in order.
A credible adviser will explain their fees plainly and be comfortable with the questions above. If you are weighing up a sale, the first conversations — about timing, readiness and what the process would realistically cost — are free, and they are the ones that shape everything after.