[This is an English translation of an article originally published in Czech.]
There are many different reasons why you may decide to sell your company. You may be driven by those around you or by external circumstances. You may want to sell because of your age and because you have no successor. Or you may simply want a change, wish to pursue something else or work less intensively.
In all these situations, owners first try to estimate and determine the value of their company and the price they might be able to obtain from an investor. They are often less certain, however, about the cost of the entire sale process – not only in financial terms, but also in terms of time, energy and psychological strain. Let us therefore examine these costs based on our experience.
Financial costs: advisers, lawyers and other services
Advisory fees usually consist of two components. The first is a fixed fee (engagement fee), often a monthly payment ranging from CZK 100,000 to CZK 200,000, typically paid over six to eight months, or a similar total amount divided between several stages of the process. The second and larger component is the success fee, typically an agreed percentage of the transaction value, paid only upon completion of the transaction, when the owner has received the sale proceeds.
According to the international Firmex M&A Fee Guide 2024–25, success fees in Europe vary primarily according to the anticipated size of the transaction: for the sale of a company worth approximately CZK 100 million, the fee will be around four to five per cent; for a transaction worth CZK 500 million, it may fall to three per cent; and for transactions exceeding CZK two billion, it will be around 1.5 to two per cent.
In the Czech Republic, fees are often slightly below this European average and depend not only on the size of the company, but also on other factors such as the attractiveness of the sector, the company’s situation, its performance, growth and management quality, the anticipated complexity of the transaction, and the number and type of owners. The adviser evaluates all these factors in order to estimate the demands of the entire process correctly.
Further costs include legal services, tax and accounting advice, a virtual data room and similar services. Overall, these may amount to several hundred thousand or even a few million Czech crowns. Depending again on the complexity of the situation and the transaction structure, they may represent 0.5–1.5 per cent of its value.
For a larger or international transaction, where, for example, legal teams in several countries must conduct complex due diligence while simultaneously negotiating several complicated transaction documents, costs may rise to several hundred thousand euros even for a mid-sized transaction.
Time costs: make room for the sale – for yourself and your management team
The sale process usually takes nine to 12 months and places considerable demands on the capacity of both the owner and the management team. During the preparatory phase, which involves two to three months of intensive work on the strategy, financial plans, materials and data room, the process may consume 20 to 40 per cent of the capacity of both management and the owners.
The adviser handles the approach to investors, so this stage is less demanding for the team and the owners. The due diligence phase, by contrast, can be highly demanding. It often involves hundreds of questions from several prospective buyers, making a substantial time commitment from management and the owners unavoidable.
Contract negotiations once again require greater involvement from the owner in resolving key parameters and conditions. We therefore recommend that clients agree on this exceptional level of cooperation with the management team in advance and compensate the additional workload through appropriate financial incentives.
In one case, we discussed this subject in detail with the owners, who ultimately decided to distribute several per cent of the total sale price among the management team and reward them not only for the transaction itself, but also for the many preceding years spent building the company together. In effect, this produced the same outcome as if they had been minority co-owners.
Reputational costs: when a poor sale continues to cost you in the future
It is also important to remember that a sale can fundamentally affect the owner’s reputation. Selling a company to a reputable investor or strong business will enhance that reputation and create new opportunities. Conversely, selling to an entity with a questionable reputation may damage it.
Another common scenario is for the owner to sell a majority stake to a strong partner while remaining in the company as a minority shareholder. This allows the owner to participate in its continued growth while gaining access to new business circles. Such a scenario is often highly attractive because it may give the owner access to the ranks of the “larger players”, and this next stage of entrepreneurship may once again represent a personal opportunity and a step forward that would otherwise not have been possible.
Sometimes it is genuinely necessary to conduct due diligence on the counterparty – which is typically another responsibility of a good adviser. The adviser should be able to evaluate and assess the quality of individual investors and their potential future conduct.
Every sale involves sharing sensitive data – trade secrets, contracts and information about customers and key employees. Although these are protected by a non-disclosure agreement (NDA), the risk of their misuse cannot always be eliminated entirely. If the transaction does not proceed or the company is ultimately purchased by someone else, this may damage the company’s value. It is therefore necessary to consider particularly carefully what information we provide, to whom and at what stage of the negotiations.
Effective communication strategies and approaches exist to manage this risk properly. For example, if a competitor is interested in acquiring the company, we can share information during due diligence under a special regime, thereby ensuring that it cannot be misused.
Emotional costs: consider in good time what you will do after the sale
A sale is not merely an economic transaction, but also a highly distinctive psychological moment. The owner loses their everyday purpose, their team and often their identity. A sense of emptiness may arise, accompanied by the question: “What will I do next?”
Owners often devote a great deal of time to their businesses, and after the sale it can be difficult to fill that time appropriately and find similarly attractive activities that provide a comparable sense of fulfilment. The new focus is often connected with managing the proceeds from the sale. An unpleasant scenario can arise when a successful entrepreneur becomes an unsuccessful investor – or simply an investor who does not find it nearly as engaging.
A sale may also mean losing important relationships – not only professional ones – with the management team, key employees or business partners. Some colleagues pursue other professional opportunities after the transaction; others remain, but their relationships with the former owner end or change fundamentally in nature. The owner may then need to establish new social connections and seek interactions to replace the original team or “family” they had within the company.
Before completing the sale, one of our clients had already planned their next investments and a new business in precise detail and had begun developing them in parallel. They therefore had something tangible to look forward to in the next stage of their entrepreneurial journey and were more excited about it than about the successful sale of the company itself.
Selling a company is one of the most important moments in an entrepreneur’s life. It does not come without cost – it requires money, time, energy and emotional investment. It is valuable to have an experienced and professional team on your side: one that routinely handles similar situations and helps the owner make the right decisions at every stage of the sale process. At the same time, such a team may be the only party with whom the owner can discuss certain matters that they almost invariably have nobody else to consult – often highly personal, sensitive and confidential issues.
24. 1. 2026