I’m riding shotgun for the founder of a VC-backed company as he sells his company. The process has been fun, tons of work, and highly educational. Selling a VC-backed company is different than selling a non-VC-backed company. The cap table is more complex, and many rights related to the sale of a company are embedded in the terms of VC-led fundraising rounds. Because of this complexity, more review is needed to make sure everything is in order. Cue the lawyers.

A big takeaway is that legal fees can be a material percentage of deal size, regardless of the size of the deal. As one lawyer put it, M&A legal fees don’t scale down well unless the buyer is willing to accept potentially material risks—IP isn’t cleanly owned, liens exist, pending litigation, etc. It’s not uncommon for each side to get a $30k–$50k bill for a small deal (think more than $100k but less than $500k). Deals over $1 million can involve legal fees for each side that easily exceed $100k.