Legal costs now average 4.7% of transaction value in UK deals. This ‘value haircut’ professional service fees created is frequently ignored in projections buyers prepare. The new survey by Aperio offers a benchmark that business valuers can use to support their deal costs projections—even though the study omits the cost burden of financing, audit, and consulting services.

The Changing PE Legal Spend Landscape includes data from 53 PE firms from the UK as well as 47 firms headquartered in the US. Of those firms, 34% report spending between 6% and 12% per transaction, and not a single firm in the survey reported average legal costs per deal below £40,000. For these deals, the vast majority spend between £1.5 million and £20 million on each transaction.

The biggest portion of these totals are allocated to fees for fundraising and transaction costs, but Aperio notes other types of legal fees that frequently represent more than 5% of the total spend:

• Eighty-seven percent cited employment;
• Eighty-seven percent cited regulation;
• Eighty-one percent cited litigation; and
• Fifty-three percent cited tax.