Buying or selling a small business is one of the biggest financial moves you will ever make. The stakes are high, the paperwork is thick, and one wrong move can cost you tens of thousands of dollars or a deal that should have closed months ago. That is where a business broker comes in.

A business broker is a licensed professional who specializes in helping buyers and sellers complete business transactions. Think of them like a real estate agent, but for companies instead of houses. They know how to value a business, find qualified buyers, negotiate terms, and guide both sides through due diligence and closing.

This guide breaks down exactly how business brokers work, when you need one, how to find a good one, and how to make sure you do not get taken advantage of in the process.

What Does a Business Broker Actually Do?

A business broker wears a lot of hats depending on which side of the deal they are working. Here is what they typically handle:

On the sell side:

• Helping you determine a realistic asking price based on market data and financial performance
• Preparing a Confidential Information Memorandum (CIM) that presents your business attractively to buyers
• Marketing your listing confidentially so employees, competitors, and suppliers do not find out before you are ready
• Screening potential buyers to confirm they are financially qualified and serious
• Negotiating the purchase price and deal structure on your behalf
• Coordinating due diligence, document requests, and communications between both parties
• Working with attorneys and accountants to get the deal to closing

On the buy side:

• Finding businesses for sale that match your criteria, including off-market listings
• Helping you evaluate the financials and ask the right questions
• Structuring your offer in a way that is competitive but protects your interests
• Navigating negotiations without blowing up the relationship with the seller
• Connecting you with lenders, attorneys, and other resources you need to close

A good broker is not just a middleman. They are an experienced guide who has done this dozens or hundreds of times and knows where deals fall apart before they do.

When Should You Use a Business Broker?

Not every transaction needs a broker. Here is a quick breakdown of when it makes sense to hire one and when you might be able to go it alone.

Use a broker when:

• Your business sells for $500,000 or more (brokers add the most value at this level)
• You do not have an obvious buyer already lined up
• You have never sold a business before and do not want to learn on the job
• You need confidentiality maintained throughout the process
• You want to keep running the business while the sale is underway
• You are buying a business and want access to off-market deals or help with valuation

You might skip the broker when:

• You already have a known buyer, such as a partner, family member, or competitor who approached you
• The deal is very small (under $100,000) and a broker’s commission would eat too much of the sale price
• You have done this before and have the network to manage the process yourself

Even when you skip a broker, you still need a good business attorney. Do not try to close a business sale on a handshake. If you are thinking about the exit side of things, read our guide on how to exit your small business for a broader look at your options.

How Business Brokers Get Paid

Most business brokers work on commission, typically paid by the seller at closing. Here is how the math usually works:

• Commission rate: Usually 8% to 12% for businesses under $1 million in sale price. Larger deals often use the Lehman Formula or a tiered structure that brings the percentage down as the deal size goes up.
• Minimum fees: Many brokers have a minimum commission of $10,000 to $15,000 regardless of sale price. This protects them for their time on smaller deals.
• Retainer fees: Some brokers charge an upfront retainer of $1,000 to $5,000 that is applied against the final commission. If the deal does not close, you may lose that retainer depending on the agreement.
• Success-only: The most common structure is no fee until the deal closes. This aligns the broker’s incentives with yours.

On the buy side, buyers typically do not pay broker fees directly. The broker is usually paid by the seller’s side, though this varies. Always ask upfront so there are no surprises at closing.

How to Find a Good Business Broker

Finding a qualified broker takes more than a Google search. Here is how to vet one properly:

Look for credentials

The two main professional designations for business brokers are the Certified Business Intermediary (CBI) from the International Business Brokers Association (IBBA) and the M&A Source designation for mid-market deals. These are not required to practice, but they signal someone who has invested in their professional development.

Ask about their track record

How many businesses have they sold in the last 12 months? What is their average list-to-close time? What percentage of their listings actually close? Industry averages hover around 20% to 30% of listed businesses actually selling, so a broker who claims a much higher close rate should be able to back it up with data.

Check their industry specialization

Some brokers specialize in restaurants, healthcare practices, service businesses, or e-commerce. If your business is in a niche, a broker who knows that industry will have better buyer relationships and a sharper sense of valuation.

Interview at least three brokers

Never sign with the first broker you meet. Interview at least three and compare their proposed listing price, marketing strategy, and fee structure. If two brokers quote similar values and one is significantly higher, be skeptical. Overpricing a business to win the listing is a common tactic that wastes everyone’s time.

Read the listing agreement carefully

Before you sign, understand the exclusivity period (typically 6 to 12 months), what happens if you find the buyer yourself, and what the broker’s obligations are if they do not perform. Our guide on how to negotiate a business contract can help you approach this conversation with more confidence.

What to Expect During the Process

Whether you are buying or selling, understanding the typical timeline helps you avoid surprises.

For sellers, the process usually looks like this:

1. Preparation (2 to 4 weeks): Gather 3 years of financials, tax returns, lease agreements, and operational documents. The broker uses this to build your CIM.
2. Marketing (4 to 12 weeks): The broker lists your business on platforms like BizBuySell and their private buyer network under a code name to protect confidentiality.
3. Buyer qualification (ongoing): Interested buyers sign an NDA and receive the CIM. The broker screens them for financial ability and intent.
4. LOI and negotiation (2 to 4 weeks): Serious buyers submit a Letter of Intent. You negotiate price, deal structure, seller financing terms, and transition period.
5. Due diligence (30 to 60 days): The buyer digs into your financials, operations, contracts, and legal history. This is where many deals fall apart, so be prepared and be transparent.
6. Closing (2 to 4 weeks): Attorneys finalize the purchase agreement, funds transfer, and ownership changes hands.

Total timeline from listing to close: typically 6 to 12 months for most small businesses.

Red Flags to Watch Out For

Not all brokers are created equal. Watch out for these warning signs:

• Inflated valuations to win your listing: If a broker quotes a price significantly above what others quote, they may be flattering you to get the listing, then pressuring you to reduce the price after you are locked into an agreement.
• Vague marketing plans: A good broker should tell you exactly where your listing will be advertised and how they will identify and approach potential buyers. “We have a big buyer database” is not a plan.
• Long exclusivity with no performance clause: A 12-month exclusive listing with no milestones or exit clause is risky. Push for a 6-month term with a right to terminate for non-performance.
• Pressure to accept the first offer: A broker who pushes you to take a lowball offer quickly may be prioritizing their commission over your best outcome. Take your time.
• No communication after listing: If your broker goes quiet after signing the agreement, that is a problem. Set expectations upfront for weekly or biweekly check-ins.

Buying a Business Through a Broker

If you are on the buy side, working with a business broker opens doors to listings that never hit public platforms. Many of the best opportunities are sold quietly through broker networks before they ever appear on BizBuySell or similar sites.

When working with a buyer’s broker or approaching a seller’s broker as a buyer, be ready to prove you are financially qualified early. Brokers will not waste time on buyers who cannot demonstrate the ability to fund the purchase, whether through cash, SBA financing, or a combination. Our guide on how to grow through acquisitions walks through the full buyer-side playbook in detail.

Also plan for deal costs beyond the purchase price. Attorney fees, due diligence, accounting review, and working capital adjustments can add 3% to 7% to the total cost of a transaction. Budget for it now so it does not catch you off guard at the finish line.

A Note on Seller Financing

One thing that surprises many first-time buyers and sellers: a significant portion of small business deals include seller financing, where the seller accepts a portion of the purchase price as a note paid over time. This is common for deals in the $100,000 to $2 million range and can actually help both sides.

For sellers, it demonstrates confidence in the business and can help close deals faster. For buyers, it reduces the upfront cash needed and gives the seller skin in the game during the transition. A good broker will help you structure seller financing terms that work for both parties, including appropriate interest rates, repayment periods, and default protections.

The SBA’s business ownership transfer resources are worth reading if you are navigating a deal that involves SBA-backed financing, which has specific rules around seller notes and deal structure.

The Bottom Line

A great business broker is worth every dollar of their commission. They bring market knowledge, qualified buyers, negotiating experience, and a process that keeps deals from falling apart at the worst possible moment. A bad broker costs you time, money, and sometimes the deal itself.

Whether you are ready to sell, thinking about buying, or just exploring your options, doing your homework on the broker you choose is as important as any other part of the transaction. Take your time, ask the right questions, and do not sign anything until you understand what you are agreeing to.

If you are building toward an exit, the time to start thinking about brokerage strategy is earlier than you think. Most buyers pay a premium for businesses that are clean, well-documented, and running smoothly without the owner. Start building that business now.

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