Total Deal Costs for a Self Funded Searcher?

May 03, 2021

by a searcher in New York, NY, USA

I am a bootstrapped self funded searcher and have been getting lots of different quotes on how much things like Legal, QofE, Tech Audit, Bank closing could most efficiently cobbled together while also getting everything done properly. Anyone feel comfortable sharing thoughts?

Thanks

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Reply by a searcher
in Austin, TX, USA

If you have a deal or asking a general question for all our awareness. let me know I have someone who is is helping searchers like myself with some skin in the game for due diligence, CFO type support and pre due diligence, deal structuring etc. I am also available to searchers for a chat anytime to brainstorm on deals.

Reply by a searcher
from Michigan State University in Dallas, TX, USA

I'm new to the SF world, and honestly pretty surprising at the numbers I've seen thrown out from peers over the months. It may have to do with the formal structure of it all or the PE/Inv. banking/M&A backgrounds of many searchers. Personally I came from the opposite direction, purchasing a handful of small businesses being very frugal. I'd do all my own contracts, diligence, etc. Yes, I didn't know what I didn't know, but as a result I did learn a ton. For example, never knew what a Q of E was till recently, and would have just paid my business CPA to do a general financial diligence. This time around I'll be getting a few professionals alongside me to ensure I do as thorough of a diligence as possible. I've slated $20k for a Q of E (avg. cost after 5 quotes - $15k-$30k), $10-15k for legal (avg. was $40k-200k), insurance diligence (free), and another couple of thousand for paid diligence reviews from my former CPA, current PE friends, etc. Legal will be the biggest factor, and finding an attorney that both fits what you're doing plus is understanding of a tight budget is very difficult. If you can minimize the burden on them and consolidate some back and forth between you/seller, have an asset purchase, no significant legal diligence requirements, then you should be able to get in much lower than the $100k+ quotes I've received from many attorneys. Like many have said, it really depends on the deal, your background & comfort level, and each person you hire onto your time. I expect to be at around $25k-40k, all-in, for deals I'm looking at in the $3-6M EV range.

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