How Much Does It Cost to Sell a Business
Sellers got 83% to 92% of the price in cash at closing on average, per the Q2 2026 Market Pulse survey.
Words by
Matan Michael
Selling a business costs more than the broker fee. Between the fee, closing costs, paying off what the business owes, money held back after closing and taxes, the amount you keep can be a lot less than the headline price, and the gap depends on how the deal is structured. Every range below was checked against IRS guidance and industry sources in November 2026.
Where the money goes, in order
The headline price is what the buyer pays. What lands in your account is what's left after five things come out of it: the advisor or broker fee, closing costs, paying off what the business owes, any money held back after closing, and taxes. Taxes are often the biggest of the five.
1. The sale fee
On businesses under about $1 million most brokers charge 8% to 15% with a minimum fee, and on larger deals the percentage steps down, often to the low single digits. Some firms also charge a retainer up front. The full ranges are in business broker fees.
2. Closing costs
Your lawyer: $2,500 to $5,000 on a small deal, and roughly 0.5% to 2% of the price on bigger ones once accounting is in.
A valuation or appraisal: about $1,000 to $20,000.
A quality of earnings report, if the buyer or you order one: about $5,000 to $15,000 at a small firm on a deal under $5 million, and $25,000 to $100,000 or more at a large CPA firm.
Escrow: usually under 1% of the price, often split with the buyer.
3. Paying off what the business owes
Most deals close cash free and debt free. You keep the cash in the business and you pay off its loans, lines of credit and liens out of the proceeds, so a $3 million sale with $400,000 of debt sends $400,000 to the lender first.
The buyer also expects a normal level of working capital to be left in the business, meaning receivables and inventory minus payables. The two sides agree on that number, called the peg, and the price moves up or down at closing depending on whether you deliver more or less. SRS Acquiom's 2026 data has a price adjustment in 93% of deals, and in most of those the price changed at closing.
4. Money held back after closing
On many deals part of the price sits in escrow for a while to cover problems the buyer finds after closing. 5% to 15% of the price held for 12 to 18 months is common, and Seyfarth's middle market survey puts the median around 9% for 12 months. It usually comes back to you, just later. If part of the price is a seller note or an earnout, that money also comes later, and it depends on the business doing well. Market Pulse's Q2 2026 survey has sellers getting 83% to 92% of the price in cash at closing on average.
5. Taxes
Federal capital gains: 0%, 15% or 20% for 2026. The 20% rate starts at $545,500 of taxable income for a single filer and $613,700 for a married couple filing jointly.
The 3.8% net investment income tax can apply on top above $200,000 of income, or $250,000 for a couple. Owners who actively run the business are often fully or partly exempt on the business gain, which is worth confirming with your CPA before closing.
Depreciation recapture: the part of the price tied to equipment you've already written off is taxed as ordinary income at your regular rate. Real estate gain from past depreciation is taxed at up to 25%.
Asset sale or stock sale: most small deals are asset sales, and how the price is split across equipment, inventory, goodwill and a non compete decides how much is ordinary income and how much is capital gain. If your company is a C corporation, an asset sale can be taxed twice, once at the company and again when the money comes out to you.
State tax: California has no lower rate for capital gains, so the gain is taxed like regular income at the state's rates, which are among the highest in the country.
Seller financing: with an installment sale you generally pay tax on the gain as the payments come in, which can spread it over several years.
What to do before you sign anything
Get a list of every loan, lease and lien the business has, so you know the payoff number.
Ask your CPA to estimate the tax on an asset sale and on a stock sale at your likely price.
Know your normal working capital before a buyer tells you what it is.
Turn the fee scale, the escrow terms and any seller note terms into dollar amounts.
If you want a starting number for what your business could sell for, Business Advisors of America offers a free valuation.
Where these numbers come from
Checked on November 10, 2026: the Tax Foundation's 2026 brackets, IRS guidance on capital gains, the net investment income tax, sales of business property, purchase price allocation and installment sales, SRS Acquiom and Livmo on escrows and price adjustments, the IBBA Market Pulse, and our fee sources. Tax rules change and every situation is different, so run your own numbers with a CPA.
