What does it cost to sell a business?

These costs are real money, and they come off the top before you pay taxes. A business owner who models only the headline valuation multiple and forgets transaction costs will overestimate their net proceeds by six figures or more on most deals. This page breaks down each cost category so you can build an accurate picture before you start a process.

For a starting valuation range, use the business valuation calculator or the EBITDA multiples by industry benchmarks. This page picks up where those leave off: what happens to that headline number on the way to your bank account.

1. M&A advisor or broker success fee

The largest single transaction cost for most sellers. The success fee is a percentage of the enterprise value paid to the advisory firm when the deal closes. It is separate from any monthly retainer, which is typically credited against the success fee at close.

Deal size (enterprise value)	Advisor type	Typical success fee	Minimum fee
Under $2M	Business broker	8%–12%	$25K–$50K
$2M–$10M	Business broker / boutique LMM	6%–10%	$75K–$150K
$10M–$25M	LMM investment bank	4%–8%	$200K–$400K
$25M–$75M	LMM / mid-market bank	3%–6%	$300K–$600K
$75M+	Mid-market bank	2%–4%	$750K+

The Lehman formula (5% on the first $1M, 4% on the second, 3% on the third, 2% on the fourth, 1% above $4M) is the historical baseline. Most modern engagements use a flat percentage or a modified Double Lehman that keeps rates higher at larger deal sizes. The M&A advisory fees guide covers fee structures in detail, including how to negotiate retainer credits and cap reimbursable expenses.

Monthly retainers, where charged, run $2,000–$25,000 per month and are typically credited against the success fee at close. A 12-month engagement with a $7,500/month retainer adds $90,000 to the total cost before the success fee, though most sellers recover this at closing.

2. Legal counsel (transaction attorney)

Every business sale above the smallest transactions requires a dedicated M&A attorney. The attorney negotiates and finalizes the letter of intent, drafts or redlines the purchase agreement, prepares disclosure schedules, and advises on representations and warranties. Trying to use a general-practice attorney or relying on the buyer's counsel is a common way sellers lose value late in a deal.

Deal size	Typical legal cost	What drives variation
Under $2M	$8,000–$25,000	Asset sale, straightforward agreement
$2M–$10M	$20,000–$60,000	Complexity of reps package, number of negotiation rounds
$10M–$25M	$50,000–$120,000	PE buyer, disclosure schedules, escrow structure
$25M–$75M	$100,000–$250,000	Full purchase agreement process, R&W negotiation
$75M+	$200,000–$500,000+	Institutional process, merger agreement complexity

Stock sales cost more to paper than asset sales because the buyer acquires all liabilities and the reps and warranties package is more extensive. Deals with earnouts, seller financing, or rollover equity add legal complexity and cost. Budget toward the top of the range if you are selling to a private equity buyer running a structured process.

3. Quality of Earnings (QoE) report

A quality of earnings report is an independent financial review prepared by a third-party accounting firm (not your regular CPA). It validates your normalized EBITDA or SDE, verifies add-backs, reviews revenue recognition, and flags accounting risks that could reduce your valuation in buyer diligence. Buyers on deals above roughly $5M enterprise value usually require one, and buyers sometimes impose a price reduction if their own QoE finds problems that yours did not disclose.

A sell-side QoE, prepared before you go to market, lets you control the narrative, identify issues before buyers do, and run a cleaner process. It is increasingly expected above $10M enterprise value.

Deal size	Typical QoE cost	Notes
Under $5M	$10,000–$25,000	Often waived at very small deal sizes; buyers run their own
$5M–$25M	$20,000–$50,000	Sell-side QoE increasingly expected; reduces buyer diligence risk
$25M–$75M	$40,000–$80,000	Standard; buy-side QoE will also run (not your cost)
$75M+	$75,000–$200,000+	Full financial due diligence scope; may include working capital analysis

QoE costs have risen since 2023 as buyers have tightened diligence requirements. Budget toward the high end of each range if your financials have been owner-managed (not reviewed by a CPA), if your add-backs are significant relative to reported earnings, or if your revenue recognition is non-standard.

4. Tax advisory

A transaction-experienced CPA or tax attorney advises on deal structure before you sign anything. The difference between an asset sale and a stock sale can change your federal and state tax bill by seven figures on a mid-market deal. This is not the same as your ongoing tax preparation; it is specialized M&A tax advisory work.

Service	Typical cost	When relevant
Asset vs. stock sale analysis	$5,000–$15,000	Every deal; done before LOI
Section 338(h)(10) election analysis	$5,000–$15,000	C-corp targets; converts stock sale to asset sale treatment
QSBS analysis (C-corp founders)	$3,000–$10,000	Potential $10M capital gains exclusion under Sec. 1202
Installment sale / seller note structuring	$5,000–$20,000	When you are carrying part of the purchase price
Full deal tax advisory (all of the above)	$15,000–$50,000	Comprehensive for deals $10M+

The tax advisory fee is often the highest-ROI spend in the entire transaction. A $10,000 analysis that identifies a Qualified Small Business Stock exclusion or a more favorable deal structure can save hundreds of thousands of dollars. Hire a CPA who has closed business sales in your structure and state, not a general-practice tax preparer.

5. Reps and warranties (R&W) insurance

Reps and warranties insurance is a policy that covers a buyer's losses if any of the seller's representations in the purchase agreement turn out to be inaccurate. It is common on deals above $10M enterprise value and increasingly expected by private equity buyers at $25M+. For sellers, R&W insurance replaces or reduces the traditional escrow holdback, which means you collect more of your proceeds at close rather than waiting 18–24 months for escrow release.

Deal size	Typical premium	Notes
Under $10M	Not typical	Minimum premium (~$100K) exceeds the cost-benefit threshold
$10M–$25M	$100,000–$200,000	2%–4% of policy limit; often buyer-paid but seller-negotiated
$25M–$75M	$200,000–$500,000	Standard in PE-backed deals; replaces 10% escrow with 1%–2%
$75M+	$400,000–$1,000,000+	Negotiated by broker; premium drops as % of deal at larger sizes

The premium is sometimes split between buyer and seller or paid entirely by the buyer as a cost of doing the deal. Your M&A advisor negotiates who bears the premium during the LOI stage. The underwriting process requires a clean sell-side QoE and a thorough disclosure schedule, which is another reason both matter.

Full cost picture by deal size

The table below combines all five categories into a total estimated seller cost range at each deal size band. These are ranges, not fixed numbers; the actual cost depends on deal complexity, buyer type, negotiation intensity, and state.

Deal size (EV)	Advisor fee	Legal	QoE	Tax advisory	R&W ins.	Total %
Under $2M	8%–12%	1%–2%	0.5%–1.5%	0.5%–1%	—	10%–18%
$2M–$10M	6%–10%	0.8%–2%	0.5%–1%	0.3%–0.7%	—	8%–14%
$10M–$25M	4%–8%	0.5%–1.5%	0.3%–0.8%	0.2%–0.5%	0.5%–1%	6%–12%
$25M–$75M	3%–6%	0.3%–1%	0.2%–0.4%	0.1%–0.3%	0.4%–0.8%	4%–9%
$75M+	2%–4%	0.2%–0.5%	0.1%–0.3%	0.1%–0.2%	0.3%–0.7%	3%–6%

These are indicative ranges for private company transactions. Deal costs in the middle of each band are most common. Highly contested processes, complex deal structures, or deals with significant legal disputes can push costs above the top of the range. Capital gains tax is not included; see a CPA for an after-tax proceeds model specific to your situation and structure.

What is not in this table

• Capital gains tax. Federal long-term capital gains (20%), the 3.8% NIIT, depreciation recapture, and state taxes apply on top of transaction costs. Total tax often exceeds total transaction costs. Model both before you set your walk-away number.
• Working capital adjustments. The purchase price is adjusted at close based on the target working capital peg. This is not a fee, but it can move your proceeds by tens of thousands of dollars in either direction.
• Earnout payments. If part of your deal is contingent on post-close performance, you may not receive some proceeds for 12–36 months after close. An earnout is not a fee, but it changes when you collect.
• Management and employee costs. Retention bonuses, change-of-control payments, and legal costs related to employee matters are deal expenses that vary widely by company.

How to reduce your transaction costs

• Negotiate the retainer credit upfront. Push for 100% of retainer payments to credit against the success fee. Most reputable advisors will agree on attractive deals; partial credits are a reasonable fallback.
• Prepare your financials before you hire an advisor. Clean, reviewed financial statements with documented add-backs reduce the scope (and cost) of the QoE report and speed up buyer diligence. A one-time CPA review costs $5,000–$15,000 and often saves more than that in QoE and legal fees.
• Hire M&A specialists, not generalists. A transaction attorney who handles business sales regularly works faster and costs less per hour than a generalist who learns on your deal. The same applies to your CPA.
• Run a competitive process. Advisors who create real competitive tension among buyers routinely achieve 20%–40% higher prices than direct negotiations. The advisor fee is almost always the highest-ROI spend in the transaction. See the best sell-side M&A advisory firms for firms that run structured competitive processes.
• Model the after-tax number before you set a price. Sellers who optimize for headline price sometimes leave more money on the table in tax than they save in negotiation. An asset sale structure that costs the buyer more in taxes may cost you less in capital gains on the right deal.

For current deal value benchmarks by industry and deal size, see the ProCloser deal valuation benchmarks, which draw on closed transaction data from the ProCloser deal network. For the full EBITDA and SDE multiple range by sector, the EBITDA multiples by industry report is the reference data set.

Questions sellers ask about transaction costs

What does it cost to sell a business?

Total seller-side transaction costs run 5%–18% of enterprise value depending on deal size. Smaller deals (under $5M) carry proportionally higher costs because advisor fees run 8%–12% and minimums kick in. Larger deals ($25M–$75M) typically see total costs in the 5%–9% range as percentages fall with deal size. The main cost categories are: M&A advisor success fee, legal counsel, quality of earnings report, tax advisory, and reps & warranties insurance (for deals $10M+). Capital gains tax is on top of these figures.

What is a quality of earnings report and how much does it cost?

A QoE report is an independent accounting review that validates your normalized EBITDA or SDE and verifies add-backs. It is commonly required by buyers on deals above $5M enterprise value. A sell-side QoE, done before you go to market, puts you in control of the financial narrative. Cost: $10,000–$25,000 for deals under $5M, $20,000–$50,000 for $5M–$25M, and $40,000–$80,000 for $25M–$75M deals.

Do I need a lawyer to sell my business?

Yes, on any deal above the smallest main-street transactions. A transaction attorney reviews and negotiates the letter of intent, drafts or redlines the purchase agreement, prepares disclosure schedules, and advises on the reps and warranty package. Budget $15,000–$40,000 for deals under $5M and $40,000–$120,000 for $5M–$25M deals. Using a generalist attorney or relying on the buyer's counsel is one of the most reliable ways sellers lose value late in a process.

What is reps and warranties insurance and when is it required?

R&W insurance covers a buyer's losses if the seller's representations in the purchase agreement turn out to be inaccurate. It is common on deals above $10M enterprise value and standard in PE-backed transactions at $25M+. For sellers, the benefit is a smaller or eliminated escrow holdback, meaning more proceeds at close. The premium runs 2%–4% of the policy limit (roughly 0.5%–1% of deal value), with a typical minimum around $100,000.

How much will I keep after transaction costs and taxes?

Transaction costs reduce gross proceeds by 5%–18% depending on deal size. Capital gains tax (federal 20% long-term rate plus 3.8% NIIT for high earners, plus state tax) applies to the remainder. On a $5M asset sale, a seller might pay 8%–12% in transaction costs and 24%–30% in combined taxes, keeping 60%–70% of the headline price. The exact outcome depends on deal structure, your basis in the business, state of residence, and whether installment sale or QSBS treatment applies. Model this with a transaction CPA before you set your walk-away price.