What are the typical costs for due diligence?

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February 13, 2024

by a searcher from University of Northern Colorado - Kenneth W. Monfort College of Business in Denver, CO, USA

Curious what peoples experiences are for costs associated with due diligence.

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Reply by a searcher
from Rice University in Houston, TX, USA
@Bryan as we are a Q of E provider (my current role within an M&A / Accounting firm) I can't provide exact details of how we quote on a public forum like this - but it all depends on the complexity and size of the business. I can share that our quotes include a range of total spend and we bill the exact amount of time spent that is usually within or close to that range. If items come up that cause us to deviate from our assumed level of effort, we notify the client and ask them whether they want us to dig down into X area for additional cost or whether they'd prefer to conduct that diligence on their own (or leave it out if they are comfortable with it) and then we proceed as the client prefers. To give a huge, typical range - let's say ~$20k to ~$150k for small to medium sized businesses for a broad ballpark. Feel free to give me a call at###-###-#### or email at redacted if you want to chat further!
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Reply by a searcher
from Columbia University in Little Rock, AR, USA
We are closing a manufacturing deal right now that is about $13M stock purchase. We're having to do far more DD on things like sales tax and payroll liabilities. Here's an estimated breakdown:
1) Legal DD - $30k-40k (some paid at closing)
2) QofE - $60k (paid prior to close)
3) Operational Due Diligence - $50k (some paid at close)

4) Appraisals on real estate & equipment (heavy in RE and equipment) - $15,000 (likely paid at close)


This doesn't include legal and advisor fees for things like work related negotiating the purchase agreement and lining up financing. That will run another $100k+ for a deal like this.

If we did this as an asset purchase, we'd probably spend $25-50k less.
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