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Finding the Best Business Broker: Things to Look Out For

Posted on Feb 03, 2022

Whether you want to buy a new business, sell your existing business, or participate in a company merger, a business broker can significantly impact whether you are able to meet your financial goals when changing ownership of a company. Follow this guide to find the right broker.

What does a business broker do?

A business broker is someone who facilitates the sale of a business between private buyers and sellers. Other titles for a business broker include intermediary and business transfer agent. Business brokers can work as independent consultants or as part of a brokerage firm. Business brokers can carry out a range of key responsibilities, including:

  • Preparing company records and analyzing tax data
  • Processing escrow
  • Appraising the value of a company
  • Marketing a company and finding qualified buyers
  • Screening the financial viability of businesses for sale
  • Explaining laws and regulations
  • Completing licensing and permit paperwork
  • Structuring deals
  • Negotiating a sale price
  • Maintaining client confidentiality throughout a potential sale

Do you need a business broker?

While anyone has the ability to buy and sell a business, hiring an honest, experienced business broker is a smart financial move that gives you access to strong business relationships and industry expertise that can get you a much better price when selling your company. Finding buyers and striking a fair deal on your own requires an investment of time, especially for new business owners who are unsure how to research potential buyers and set a valuation on their business.

How to find the right business broker for your company

To confidently move forward with the sale of your business through a broker, you need to be able to trust their skills, expertise and character. Business brokers often work on commission, so it’s important to work with someone you trust. Follow these steps to help assess a business broker:

1. Know what to look for

Before you even start looking for a broker, make sure you understand the key qualities to look for. These include:

  • Transparency: When you ask a broker about who pays their commission and what fees they have, they should give you a direct and honest answer.
  • Dedication: Find out if the broker works full-time or part-time. Having a broker that’s dedicated and regularly available is essential for making a smart sale.
  • Reviews: Look at each broker’s web presence and read through client reviews to get a good idea of their experience and ability to deliver results.
  • Marketing abilities: Ask brokers what channels they use to sell businesses aside from their brokerage web page.
  • Communication: You need a broker who’s available to respond to questions and quickly engage with potential buyers before the sales window closes. Look for someone who responds quickly to emails and calls, even in the inquiry stage.

2. Research local licensing rules

Each state has its own laws about what licenses business brokers need to operate. Some states do not have a specific business broker license and require business brokers to have a real estate license, while others have no requirements at all. If licensing is available but optional, look for brokers who have put the effort in to get certified.

3. Seek referrals

Your professional contacts can give you a referral to a business broker they have worked with in the past. Reach out to trusted accountants, lawyers and other business owners for recommendations.

4. Browse online directories

The International Business Brokers Association (IBBA) has an online directory with information on qualified business brokers in your area. The IBBA indicates whether a broker is a Certified Business Intermediary—a high-level qualification for brokers who have demonstrated strong ethics and expertise.

Frequently asked questions about business brokers

What does a business broker charge?

Business brokers generally charge a fee of 10% of the overall sale price to the person selling the business. Business brokers may also charge a small fee for specific services like performing a company valuation or preparing a business for sale.

How long does it take for a broker to sell a business?

Business brokers generally take between six months to a year to finalize a sale, but may take more or less time depending on the goals of their client.

What makes a good business broker?

Good business brokers have an analytical mindset, strong negotiation and persuasion skills, expansive industry knowledge and a large professional network.

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