When you sell your business you need to know the business brokers fees and commission structure in order to make the right decisions. If you’re a business owner or marketer, you probably already know how much does a broker charge to sell a business in the U.S, as it can drastically affect overall profit into your pocket and help you choose the right broker who will guide you through the transaction. In this complete guide, we’ll dive into how much do brokers charge to sell a business, what the fees go toward, examples of commission structures a broker may have, and tools/websites that can help make the selling process easier.
What is a Business Broker?
Business brokers are intermediaries bridging business owners and potential buyers. The main purpose of business brokers is to assist in the selling of businesses by offering appraisal services, marketing knowhow and negotiations. They do the heavy lifting to maintain confidentiality. They sell your business for the best possible price. But these services are not free. How much do brokers charge to sell a business is an important consideration in deciding if they are best suited to your business objectives and finance goals.
How Much Do Brokers Charge to Sell a Business?
How much do brokers charge to sell a business? Here’s an expert analysis of common broker fees:
Commission or success Fee
Most business brokers will charge you a commission based on the final sales price of the business itself. It’s typically called a “success fee” because it’s paid only once the business is sold successfully.
Standard range: 5% to 15% of the final sale price
- Small businesses (selling price less than $1 million): 10%-15%.
- Mid-market businesses ($1 million–$5 million): 8% to 12%.
- Bigger businesses (5 million+): 5 p.c to eight p.c.
Upfront Fees (Retainer Fees)
Other brokers charge an upfront, non-refundable fee before they start working on the sale. This costs will be the upfront costs in valuation and marketing and documenting.
- Typical Retainer Fee: $2,000–$20,000
And any upfront fees for these services are typically deducted from the overall commission
Flat Fees
Some brokers, especially for smaller businesses and limited focused transactions, do not charge a percentage of the commission, but rather a fixed fee.
- Flat fee range between $10,000 to $50,000 , Depending on sale complexity
What Do Broker Fees Cover?
When you pay a broker for selling your business, you’re not just paying for the actual sale – you’re paying for a host of services which add a lot of value:
Business Valuation
They evaluate the finances, assets, market trends, and industry benchmarks to determine the fair market value of your business.
Marketing the Business
Brokers leverage their networks and tools to present your business confidentially to qualified buyers.
Negotiation
Experienced brokers will negotiate a fair price and terms that get you paid the most.
Due Diligence Support
They help both sides with due diligence, so the financial, legal and operational particulars are thoroughly vetted.
Closing the Deal
All utilization notes and legal documents are taken care of by the brokers for smooth closure of transactions.
Although these services do offer value for their fees, they should certainly be quarterback-forwards, so you will want to make sure that they know people who can and will be speaking on your behalf.
Top 6 Websites and Tools to Sell Your Business
If you would like to investigate selling your business on your own beyond hiring a broker, there are many tools and online platforms that can help match sellers to buyers. Some commonly used include the following:
BizBuySell is an online marketplace for buying and selling businesses. It offers:
● Business valuation tools.
● Extensive listing options.
● Templates and guides for sellers. Fee: Starting at $59.95/month to list.
BusinessBroker.net
It is a platform for sellers, rails, and a potential buyer. It is also very easy to use and has many resources if you are selling a business in different industries.
Costs: Listing starts at $99 for 3 months.
LoopNet
LoopNet is used mostly for commercial real estate but lists businesses for sale. It’s an excellent option for brands tied to physical locations.
Cost: Varies based on listing type.
Flippa
Flippa is the go-to place for selling websites, apps, and eCommerce stores for businesses that have an online segment.
Charge: 5% to 10% of the final sale price.
Axial
Axial is an exclusive marketplace for middle-market companies, connecting business owners with professional buyers, brokers and M&A advisors.
Fee: Sellers pay on a subscription basis.
These platforms offer alternatives to traditional brokers, with tools to help you value and market your business effectively.
Example: Brokerage Fee Calculations
For example, you’re selling a $2 million business. A broker charges:
● 10% commission: $200,000.
• Upfront fee: $5,000 (subtracted from the final commission).
Total Fee: $195,000.
Although this fee can sound a bit high, the broker may be able to sell your business faster and for a higher price that will not only pay the fee but also put money into your pocket.
Is Hiring a Broker Worth It?
If any of the following ring true, hiring a broker can be a game-changer.
● If you have No experience selling businesses.
● You have access to a net of qualified buyers.
● Wish to keep the sales process a secret.
If you have a smaller business or your strength is sales, marketing, and advertising, tools or DIY may be more affordably satisfactory.
Conclusion
Brokers are important when it comes to selling your business; you need to know the costs associated with them. Brokers typically take a commission that is 5% to 15% of the agreed sale price, as well as other fees, such as retainers or flat rates for smaller businesses.
Utilizing the knowledge of brokers caní help you to attain the best value for your sale while minimizing your time and energy. You can also look into platforms and sites such as BizBuySell, Flippa, and LoopNet for different paths to sell your business.
Know your options, compare brokers and use online resources to craft a deep-fried debtcomer if you are planning to divest yourself of your business — and don’t sell it short.
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