All You Should Know About Business Brokerage Commissions

When you are getting ready to sell a business, you have to take care of a variety of tasks. To simplify the process and get the best deal, business owners often choose to work with brokers.

Business brokers manage the entire selling process from creating listings to negotiating the best price. These specialists have a wide area of expertise. Whether you need help finding the best buyer or making changes to the contract, a broker can get the job done.

For their service, business brokers charge a formidable commission. While the numbers may vary, you have to expect to pay around 10% of the final sales price.

Is it possible to negotiate a lower fee?

An established business broker is usually straightforward about the costs before signing a contract. At that point, you can have a shot at negotiating a lower fee. More often than not, a business broker doesn’t agree to lower the amount. However, you can expect them to charge less if:

  • The price of your business is very high (over $1 million).
  • The broker is fairly new and doesn’t have significant experience.

Once you settle on a fee, a broker can ask you to sign an exclusive contract. It means that the broker will receive a commission if the business is sold within the mentioned period of time. In this case, the business broker gets exclusive rights to sell your business.

Are marking costs included in the brokerage fee?

According to a Business Broker from Orlando, each business broker makes a personal decision about the services included in the fee. Some brokers ask for an all-inclusive commission. Others may charge for marketing and some other services separately.

It’s up to the business owner to discuss what is included in the fee and what isn’t. Anything beyond the fee should be mentioned in the contract.

Marketing expenses for selling a business aren’t usually high. However, the expertise business brokers have in promoting businesses in your area is the key to finding the right buyer. That’s why it’s usually a good idea to delegate marketing to an expert.

What does a business broker do to earn the commission?

A business broker fulfills a variety of functions that business owners usually don’t have the time or expertise to do.

Selling a company is much more complicated than selling real estate. All the nuances that go into keeping the sale secret, valuating the business, and collecting paperwork can seem overwhelming.

A business broker takes care of such elements as:

  • Valuating a business – understanding how much your business costs is the key to negotiating the best deal. Valuating a business requires time and extensive expertise that only qualified business brokers have.
  • Listing a business – listing a company is a complicated matter especially if you don’t want the sale to become public knowledge. A business broker knows when, where, and how to do it safely.· Marketing a business – a business broker takes care of all the marketing tasks.
  • Buyer screening – a broker evaluates all buyers who show interest in your company to understand which ones have real buying potential.
  • Negotiations – a broker takes care of all negotiation tasks to make sure you reach a good deal.
  • Closing – the broker takes care of closing the sale.

Overall, a business broker manages the entire selling process. They act on your behalf to achieve the best possible outcome.

Are there any upfront fees?

When you work with a business broker, you can expect to pay the commission after the deal is finalized. However, some brokers may ask for an upfront fee that can vary from $1,000 to $20,000.

These fees usually depend on the type of company you sell, the sales price, and the approach a business broker takes. If a broker demands an upfront fee, they have to be straightforward about why they need it.

If you don’t agree with a fee, you can always move on to the next candidate.

The Takeaway

Business brokers usually charge a sizable commission, which is around 10% of the final selling price. For this money, they take care of all aspects of the sale, from marketing to closing.

While you can sell a business without a broker, you need to spend a substantial amount of time learning the ropes, studying the market, working with documents, and negotiating with buyers. Business owners usually don’t have sufficient experience to achieve a good deal.

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