What Is a Business Broker?

Understanding Business Brokers

A business broker is a licensed professional who helps business owners sell their companies. Think of them as the real estate broker of the business world, but instead of selling properties, they facilitate the sale of entire businesses.

Business brokers act as intermediaries between sellers and buyers, handling everything from initial valuation to closing. They bring expertise in business valuation, market knowledge, buyer networks, negotiation skills, and transaction management that most business owners don't have.

What Does a Business Broker Do?

Business brokers perform multiple critical functions throughout the sale process:

• Business Valuation: Determine your business's true market value through professional analysis of financials, assets, and market comparables.
• Confidential Marketing: Create professional marketing materials that highlight strengths without revealing your identity, protecting confidentiality.
• Buyer Screening: Filter out tire kickers and focus on serious, qualified buyers who can actually complete the transaction.
• Negotiation: Handle complex negotiations on price, payment terms, transition periods, and deal structure to maximize your net proceeds.
• Financing Coordination: Help buyers secure funding through SBA loans, traditional financing, or seller financing arrangements.
• Due Diligence Management: Organize documents, respond to buyer questions, and protect your interests during the due diligence process.
• Closing Oversight: Coordinate with attorneys, accountants, lenders, and escrow companies to ensure a smooth closing.

When Do You Need a Business Broker?

You should consider working with a business broker if:

• Your business is worth $250,000 or more
• Confidentiality is critical to protect your business operations
• You need to keep running your business while selling
• You lack experience selling businesses
• Your transaction involves complex deal structures
• You want to maximize your sale price
• You value your time and want to reduce stress

Business owners who work with experienced brokers typically sell 4 to 6 months faster, get 10 to 20 percent higher sale prices, and experience significantly less stress. Even after broker commission, most sellers net more money than selling on their own.

How Much Does a Business Broker Cost?

Business broker fees typically range from 5% to 12% of the sale price, depending on business size:

• Under $500K: Typically 10% to 12%
• $500K to $2M: Typically 8% to 10%
• Over $2M: Typically 5% to 8%

Most brokers work on a success fee basis, meaning they only get paid if you sell. The seller typically pays the commission, deducted from sale proceeds at closing. Even after commission, most sellers net more money than selling on their own because brokers get higher sale prices through professional marketing and negotiation.

Benefits of Using a Business Broker

The main benefits of using a business broker include:

• Higher Sale Prices: Typically 10% to 20% more than selling on your own
• Faster Sales: 4 to 6 months faster on average
• Confidentiality Protection: Professional processes and non disclosure agreements
• Time Savings: Brokers handle 20+ hours per week of selling activities
• Reduced Stress: They handle difficult buyers and negotiations
• Professional Expertise: Valuation, marketing, negotiation, and deal structuring
• Access to Buyer Networks: Qualified buyers you can't reach on your own
• Better Deal Terms: Expert negotiation maximizes your net proceeds