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How much do brokers charge to sell a business?

How much do brokers charge to sell a business? I don't have to sell my business, I just want to sell it so that I can have more family time. I have a bottom line $$$ amount that I need to get out of it. So, with that in mind, how does the broker get paid? Do they mark up my asking price? Do they get a flat rate or a percentage? What about the buyer's side? Do I need to pay their agent?

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Answers (9)
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Most brokers charge 10%. Some charge according to the Lehman Scale. Before the Lehman brothers developed their scale, the fees charged by different institutions would vary widely, some reaching upwards of 15%. The Lehman Scale standardized these fees and was widely used up until the 1990s. The original formula applied to transactions above $1 million and followed a 5-4-3-2-1 tiered structure:
5% of the first $1 million
4% of the second $1 million
3% of the third $1 million
And so on, with a 1% charge on everything above $4 million.

Bottom line...legitimate brokers DO NOT mark up your asking price. They should help you price your business at market value. An informed buyer will pay your asking price IF you provide evidence supporting your asking price. A better alternative is to have multiple prospective buyers compete against each other. This will drive up your selling price. You should not pay the buyer's agent. The broker should split his/her commission if a buyer is using a broker.

You may want to attend a business seller's webinar in order to get more details about your selling options, the process, and fees associated with selling for maximum profit. You only have once chance to sell you business for maximum profit.

James Riddle
Solutions Provider
Atractivo Business Services
james.riddle@atractivobusinessservices.com

Mar 4, 2017
Mel Vaz
Vested Business Brokers
Co-Founder
Suffolk County, NY

Here is NY, fees range from 10% - 12%. Look for a broker who is willing to offer a non-exclusive listing agreement so you may still try to sell on your own.

Jun 16, 2016
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A good broker is like a unicorn. Most do little prep work before they list a business, instead acting as conduits for business owner data that many times is inaccurate and/or false. Yes, on occasion you'll find a broker that truly adds value and earns their commission but many are one step above or below an average used car salesman. If you have any selling/financing experience and can communicate effectively in written or verbal form you can certainly sell your own business and save the 10%. Brokers are necessary for business owners who lack any of the above skills/traits.

Jun 14, 2016
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The BAF Group LLC
MD

To flatly state that you do not need a Broker, as one writer did, is flatly irresponsible! There are some instances, and some business Owners that do not need Brokers; however, this is something that should be decided on a case-by-case basis. I have seen many people who have sold without Brokers, who have regretted it later, in terms of pricing, negotiation and terms application, and who would have benefited far more by using a Business Broker for their transactions. (In truth, there are some who have regretted using BAD Brokers, for their business sales; you need to be careful, either way.) Ms. Hernandez, since you are in the Salon business, do you recommend that all people cut their own hair? If you needed surgery, would you recommend that all people take out their own appendices? Please, do not listen to irresponsible advice from people who have - to others, right here in this Community - provided information that does not even address the specifics of the questions asked.

Sep 17, 2013
William Bruce, ABI
William Bruce Business Sales & Acquisiti
Baldwin County, AL
Premium Broker

Here's an article about business brokers and how they work including commissions.

William Bruce, President
American Business Brokers Association

Sep 7, 2013
Julie A. Barnes, CPA
Small Business Exchange, Inc.
Travis County, TX

Hi Melissa,

I echo both Michael and Don's comments. It is readily apparent that some contributors are simply trashing their legitimate and, in my opinion, more professional competitors. I encourage you to visit all of the websites provided by those who have answered your question.

By the way, I happen to charge 8% because my business is relatively young and I'm cultivating clientele.

Thanks and Good Luck
Julie A. Barnes, CPA
President, SBX, Inc.
http://www.AustinBusinessesForSaleBlog.com

Jun 6, 2010
Michael Hamlar
Hamlar Enterprises, LLC
Roanoke City County, VA

Melissa,

The average is 10% to 12% according to the Business Brokerage Press (2010). The reasoning for that percentage is due to the amount time and efforts brokers put into the sale. I can only speak for our company. If you break it down and the average sale is 7-9 months if not longer in this economy the percentage often breaks down to less than minimum wage per hour. This business is 24/7 365 days a year. Most inquiries come over the weekend. At first glance the percentage may seem high but if you factor in all the work brokers do like taking on bad leads and bad calls instead of business owner having to add stress to the process, marketing, advertising, valuating the business, research on the business and industry and etc the fee is well deserved. Again, I can only speak for our company.

In regards to pricing that depends on the agreement with the broker and should be established before the listing is accepted.

If you have any questions or need further advice please do not hesitate to contact us. I am a multiple business owner and I have experienced both sides of the business.

Regards,

Michael Lawrence Hamlar
President & CEO

Hamlar Enterprises, LLC
Hamlar Business Broker
P.O. Box 3336
Roanoke, VA 24015
Phone & Fax 1.800.682.1950
Email: mike@hamlarenterprises.com
Skype: MHamlar

Jun 6, 2010
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The BAF Group LLC
MD

The previous writer apparently is working solely for the benefit of his/her own questionable program. He/she demonstrates an obvious bias, negatively expressed, along with a complete and profound ingorance of the brokerage process and Federal Law. Yes, there are people who think their Broker was overpaid. There are many more who think they paid for excellent service and tremendous value. The same complaints and positive statements are made all the time about doctors, attorneys, accountants, plumbers, electricians, Salon Operators... You name it.

Julie Barnes made an excellent series of comments, in answer to your question. I also provided a serious response. Both addressed your questions in positive, legally correct and legitimate ways.

Jun 1, 2010
Buy-a- Company

Seems no broker wants to answer the question. The answer is 10%, typically, which is WAY too much, especially in today's Internet age of farming for prospects. You can negotiate that down to about 6%, which is still too much. Never met a seller yet who, after the process was over, didn't think the broker was way overpaid, based on services rendered.

Should the broker really get 10% of your life's work? Should they really get half of the 20% down payment? When you discover that all they did was to match up 2 people they found on the internet, you will share in the frustration of most sellers.

Jun 1, 2010

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