Buying or Selling a Business- How much are the legal fees?

Monday, September 3rd, 2018

Buying or Selling a Business

How much are the legal fees?

by Alex O’Leary, Solicitor, Commercial Department

E: alex.oleary@hanne.co.uk

T: 0207 228 0017

 

You’ve taken the plunge and decided to take on a new venture. Whether you’re buying a completely new business, expanding your current business or moving on to pastures new and selling your business, whatever your circumstances, this new venture is likely to be one of, if not the biggest undertaking in your lifetime.

With a transaction this important, you want to make sure you’re getting the best deal possible, including the best value for money on your legal costs. In this note we look at some of the key factors likely to affect the amount you will be charged by your solicitor.

Area of Expertise

Impact

Sometimes the buying or selling of a business involves the transfer of real estate. However, buying or selling a business is a corporate transaction and you should instruct a specialist corporate solicitor rather than a conveyancer or commercial property solicitor. Although some clients choose to save money on legal fees by instructing a conveyancer alone, their inexperience in corporate transactions can often cause a multitude of problems; ranging from the irritating (delaying completion) to the disastrous (failing to comply with the provisions of the Companies Act and potentially rendering the transaction void).

What you can expect from Hanne & Co

If you instruct Hanne & Co your matter will be dealt with by a corporate solicitor specialising in business sales and purchases. If your business sale/purchase includes the transfer of real estate, your corporate solicitor will be assisted by a commercial property specialist. If the business in question has employees, your corporate solicitor will be assisted by an employment specialist. Appointing one solicitor to handle all aspects of a corporate transaction may reduce your initial legal bill but the consequences of poor advice significantly outweigh the amount saved in fees.

Size and location of the law firm

Impact

It will probably not surprise you that large City firms will almost certainly charge you significantly more than your local high street solicitor. Part of the reason for this is simply location. Firms based in the City and West End have expensive offices and large fees are required to cover this. However, City firms’ larger fees are not purely location based. Their solicitors have received rigorous training in high level corporate transactions over several years and they are supported by a large team of junior solicitors, trainee solicitors, paralegals and administration staff, most of whom will be at your disposal 24 hours a day, 7 days a week. The fees they charge reflect this.

What you can expect from Hanne & Co

Based in South London, Hanne & Co prides itself on offering the same level of expertise as City and West End practices (most of our team trained there themselves), but at a price to rival your local high street solicitor.

Experience

Impact

The more experienced your solicitor, the greater their hourly rate is likely to be. Partners with over 20 years’ experience in City or West End firms can charge as much as £1,000 plus VAT per hour. Although this may seem extortionate, their experience could be invaluable and ultimately prove good value for money; especially in very high value or complex transactions. At the other end of the spectrum, appointing a junior solicitor or a solicitor with little experience in corporate transactions may be a false economy if they lack the necessary experience to guide you through the process smoothly.

What you can expect from Hanne & Co

If you instruct Hanne & Co, your transaction will be, at a minimum, handled by an associate solicitor (minimum 5 years’ experience) in our corporate department who will be able to call upon the experience of one of our partners if needs be. Unlike some firms, we will not assign a solicitor to your transaction in a purely supervisory role whilst a paralegal or trainee effectively runs the transaction. Our solicitors have full conduct of all corporate transactions from instruction to completion.

Value and complexity of the transaction

Impact

It is common for solicitors to estimate their fee as 1% of the value of the transaction. However, they should also consider the complexity of the transaction to avoid unnecessarily over-charging clients. For example, a transfer of the shares in a company that does not trade and has been set up to hold a specific asset (such as intellectual property or real estate) is more straightforward than the transfer of shares in a trading company.

What you can expect from Hanne & Co

We do not solely look at the purchase price when estimating our costs. It is our policy to get to know you and your business before giving a fee estimate. We do this by offering a free one-hour consultation to all potential business transfer clients where we discuss the transaction with you in depth. Following the consultation, we aim to provide you with a fee estimate within 24 hours

Free One- Hour Consultation

We are happy to advise you on either a fixed fee basis or provide an estimate based on time spent at our hourly rates. We also offer a combination of the two, where we work on an hourly basis with an agreed fee cap.

If you are buying or selling a business and are interested in a free one-hour consultation with a member of our corporate team please call us now on 0207 228 0017 or e-mail info@hanne.co.uk

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Should you require advice about the issues covered in this blog, please contact Alex O’Leary.