legal fees, how much? on 350k business?

[AmandeepS]

I have been looking at buying a company and I expect to buying something in the region of £300-£350k, does anyone know how much the legals are likely to cost? Also accountancy fees. I am really just after a ballpark figure as I'd like to know what sort of costs to expect on top of the purchase price.

 

[Free Lance]

On the legals:

If you are a large business yourself and want to dot i's ad cross t's (due diligence, full on negotiated agreement, etc) to minimise risk then it's the same as a £1m or £5m to some extent. In which case budget £25k minimum (£50k min if you went to a big firm).

If you want a more pragmatic approach where you do most of your own due diligence and you are prepared to take some of the transactional risks then a more realistic fee would be £5k - £10k, assuming you use a mid-tier or niche firm.

If you are taking a flyer and want to rely pretty much solely on the warranties given by the seller (perhaps retaining some of the purchase price in case of any skeletons in the closet) then £3-£5k for a mid-tier/niche firm.

It depends on whether the seller is legally represented and the quality of their lawyer - generally speaking a bad lawyer for the seller will either say nothing (great) or have lots of rubbish issues/be slow (bad - increases your cost).

It's a share acquisition so you are buying the company which comes with both the good and the bad - higher risk for you which is why it is better to do more due diligence (and/or have some kind of security such as a retention of purchase price if you are sold a bad 'un).

PM me if you would like a recommendation of a niche firm who specialise in corporate acquisitions.

 

[Displaycentreuk]

I made such an acquisition 6 years ago and the previous post closely accords with my experience.

Don't forget that if you need to borrow in order to fund the acquisition then you will need to cover 2 sets of costs (yours and the banks). I did my own legwork on the Due Diligence but the bank's chosen (!!!!) accountant charged me £8000 to spend 3 hours chatting to the vendor and producing a report.

Hope this helps.

Chris

 

[saxondale]

you were all robbed blind - a grand for legals and a grand for accountants.

 

[Displaycentreuk]

Yep, I agree.

But my point is that whilst I had control over my costs (legal and financial was about £2500) I had very little say in how much the bank spent (probably around £12,000) on its solicitors and accountants!

So if no borrowing involved, or you have wide choice of lenders, then the costs are going to be much, much, much lower.

Chris

 

[AmandeepS]

Thanks guy's. V useful info there!
Has anyone got like a due diligence check list or know where I can download one from?

 

[yorkshirejames]

I have been looking at buying a company and I expect to buying something in the region of £300-£350k, does anyone know how much the legals are likely to cost? Also accountancy fees. I am really just after a ballpark figure as I'd like to know what sort of costs to expect on top of the purchase price.

Do you mean accountancy fees associated with the transaction itself (due dilligence etc) or the ongoing costs of looking after the company.

We would be happy to assist with the former - please feel free to PM me, and I'll send my contact details.

 

[AmandeepS]

An idea on accountancy fees would great if someone could give me an idea of what to expect at the initial stage and then the on-going fees as well

 

[yorkshirejames]

An idea on accountancy fees would great if someone could give me an idea of what to expect at the initial stage and then the on-going fees as well

How long is a piece of string? For the transaction, a four or low-five figure sum, depending exactly what you need.

Ongoing - again depends what you want (not something that I generally do), a four figure sum (I'm guessing the likely size of your business.