What Does a Business Broker Do?

Business brokers act as intermediaries for buyers and sellers of privately held businesses in the buying and selling process. They examine the business, gather up-to-date financials and other crucial information, and then give a business appraisal to the seller before listing the business for sale.

What are the advantages of hiring a business broker?

  • Qualified Buyers – Business Brokers deal with buyers everyday so there is a good chance that they will already have an ideal buyer on their database who will purchase your business
  • Advertising & Marketing – Business Brokers know how to present a business for sale and know how to advertise to potential buyers. Each business is unique, and Business Brokers are skilled in knowing how to market your business to maximise it’s reach and increase the chances of selling
  • Confidentiality – In the vast majority of cases, you want to keep the sale of your business confidential from your competitors, staff and customers. Business brokers already have systems and documentation such as confidentiality agreements in place for potential buyers to sign before any information is disclosed.
  • Negotiation Experience – How often do you negotiate a business sale? Business brokers do this for a living so have a good feel of how and when they can push back on buyers demands which could lead to a higher selling price and a smoother sale.
  • Save Time – Selling a business and handling enquiries from buyers take a lot more time than most people think. If you are already busy running your business and don’t have the spare time to deal with buyers, then you should definitely use a business broker.

How Much Do Business Brokers Charge?

Business brokers typically charge a commision of 5-10% of the final business selling price with a minimum fee of $15,000 to $20,000 for smaller businesses. The commission is charged after a successful sale, but it’s not uncommon to be charged a small upfront cost of $500 to $5000 for the preparation of the information memorandum and advertising.