How much do business brokers charge to sell a business?
Professional business brokers generally have commission rates at 8% to 12% for businesses for sale. 10% is pretty much the standard although it varies depending on how good of a broker you are getting. For the right broker that extra 2% is more than paid for in the deal. Commission is generally shared between the buying and selling broker generally although often times in business transactions the broker represents both sides of the deal. Generally there is minimum commissions set at $10,000-$12,000 for main street businesses, so if your business is only a $50,000 transaction your commission rate is actually 20%+. There are business brokers out there that have minimum commission rates set at $50,000 so they are not selling your $50,000 business. Look for business brokers that sell similar size and types of businesses that you have to find a business broker that is right for you. If real estate is included in your transaction often times the commission will be more on par with the commercial real state commission standards in the range of 4% to 8%, with generally 6% being the standard shared between the buyer and seller agent. Because often times the real estate is not transacted when the business is sold, generally it is specified how much the commission will be if just the business is sold, how much the commission will be if just the real estate is sold, and how much the commission will be if they are sold together.
Larger transactions that are 7 to 9 figures may have different commissions applied. For example it may be the 10% is applied to the first million of sales price, and then a 8% on second millions, 6% on next million, 5% on the next, etc.. This is just an example. Depending on the desirability of your business, and the business brokers you are looking at you may have negotiating power with the broker. Keep in mind in that process that a really good business broker is going to have access to more buyers and will be able to spin you business in the best light and may increase the value of your business substantially. The less the broker is willing to negotiate to drop their commission down, the more value they think they can provide you. If you are dealing with a rookie broker or one that is desperate for a listing they may be willing to drop that commission rate, but they simply might not be able to get your business sold, or just won’t get you the best value. Business brokers sell businesses – remember that is their job! If you think you are talking to the best broker for the job, don’t nickel and dime the commission negotiation because they are going to try and get you the best price they can.