Guide
Business Broker Fees and Commission
Broker fees look large until you compare them to the spread between a well-run sale and a poorly run one. They look enormous if the broker adds nothing. Both outcomes are common, so it is worth understanding exactly what you are buying.
How commission is normally structured
Main street businesses, roughly under $2M, typically carry a success fee of 8% to 12% of the sale price, most commonly 10%, paid only at closing.
Larger transactions usually move to a sliding scale that decreases on higher tranches, since 10% of $15M is not proportionate to the work involved. Some engagements set a minimum fee, which is how very small deals remain viable to take on.
Some brokers charge a retainer or a valuation fee up front. That is not automatically a red flag: it filters out owners who are not serious. It is a red flag if it is large, non-refundable and not credited against the success fee.
What the fee is actually paying for
Buyer reach, which is the part owners most underestimate. A broker with an active buyer list creates competition, and competition is what moves price. One interested buyer is a negotiation you lose slowly.
Confidential marketing that does not alert your staff, competitors and customers. A negotiating buffer so you are not personally arguing with the person you are about to hand your business to. And process management through diligence, which is where unmanaged deals collapse.
When a broker is not worth it
If the business is small enough that the minimum fee is a large share of the price. If you already have a specific, funded, motivated buyer, in which case you may need a transaction attorney more than a broker.
And if the broker cannot answer what their buyer list looks like in your sector. Reach is the product. A broker without it is charging you a percentage to list your business on the same public marketplaces you could use yourself.
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