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Does anyone know where I can get a listing of states that require real estate license for business brokers?

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Answers (3)
Julie A. Barnes, CPA
Small Business Exchange, Inc.
Travis County, TX

Hello Carroll,

Both Don and Charles have provided valuable information. However, your question begs the question: "Why would a real estate license certify the competence of a business broker?" There is a world of difference between the valuation and marketing of a business vis-a-vis real estate. The following is from my blog: http://www.AustinBusinessesForSaleBlog.com:

Just as there are folks who manage to sell their own homes, there are certainly business owners who have succeeded in selling their own enterprises. Whether it is worth the time, energy and heartburn is obviously up to every individual seller but some of the critical issues you should address before considering this option are:

. The value of a home is infinitely easier to determine than a business. Similar homes in a location can be used as a baseline. How do you value a business? There are a myriad of ways to valuate larger businesses but small to medium sized enterprises simply do not fit any particular mold in most cases. In fact, the majority of small businesses are valued at the price that they eventually fetch. Cash flow, owner's benefits, net income before taxes, and the Fair Market Value of existing FF&E (Furniture, Fixtures, and Equipment) help to determine a "ball park" but the market determines the final Sales Price. Your best bet is to insure that there is a sufficiently open market among many potential buyers. SBX provides that market.

. Screening a buyer can be uncomfortable for FSBO's (For Sale by Owner) sellers - as well as the buyer. Working through a business broker gives you a professional buffer - we regularly interview and screen potential buyers so that you only meet with those folks who might reasonably be expected to make an offer.

. Do you have the time to communicate and/or meet with every interested party? As experienced business brokers, we already know that every listing will generate a flood of inquiries over time - usually upwards of 30 - 50 (depending upon the listing) but only 1 or 2 of these eventually result in an offer. Our job at SBX is to meet with each of these individuals until we find a buyer. .Do you have the sales/marketing/accounting skills to prepare a professional package for your business? SBX prepares a professional package for every one of its clients, including website presence, a financial package that includes a cash flow analysis, owner's benefit analysis, and an income tax return vs. financial statement reconciliation (whenever possible). This package is not only provided to registered buyers, but explained to them in great detail.

. Many buyers seeking to avoid brokerage fees are bargain hunters. It's human nature. Just as the FSBO seller is hoping to shave selling expenses, many of their potential buyers are hoping to do the same. In many cases, any savings earned by not retaining a business broker evaporate in the negotiation process.

. What is your time worth? In an effort to avoid paying a brokerage commission, many FSBO sellers actually spend much more in terms of business disruption, lost opportunities, and their own compensation rates while working with potential buyers, vetting those buyers, researching, negotiating, and closing.

Thanks So Much and Good Luck!
Julie A. Barnes, CPA
President, SBX, Inc.

http://www.AustinBusinessesForSaleBlog.com

Jan 29, 2010
Chuck Woolweaver
FranchiseConsulting.Net
Franchise Your Business in 60 Days
Palm Beach County, FL

In the US, licensing of business brokers varies by state, with some states requiring licenses, some not; and some requiring licenses if the broker is commissioned but not requiring a license if the broker works on an hourly fee basis. State rules also vary about recognizing licensees across state lines, especially for interstate types of businesses like national franchises. Some states, like California, require either a broker license or law license to even advise a business owner on issues of sale, terms of sale, or introduction of a buyer to a seller for a fee. According to an IBBA convention Seminar in 2000, at least 13 states required Business Brokers to have a Real Estate license. The following require a license to practice as a business broker: Arkansas, California, Colorado[2], Florida, Georgia, Idaho, Illinois, Michigan, Minnesota, Nebraska, Nevada, Oregon[3], South Dakota, Utah, Wisconsin, and Wyoming.

Certain types of merger and acquisitions transactions involve securities and may require that these "middlemen" be securities licensed in order to be compensated.

Jan 28, 2010
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The BAF Group LLC
MD

I would check with the IBBA.

Jan 27, 2010