Selling a business is likely one of the most consequential decisions you will make as an owner. It also involves a process that many owners have never navigated before: determining what the business may be worth, finding qualified buyers, protecting sensitive information, evaluating offers, and managing the steps between an agreement and a closing.
A business broker helps owners navigate that process. Depending on the size and complexity of the business, you may also hear the terms business intermediary or M&A advisor. While their titles and areas of focus can vary, their role is to help facilitate a transaction between a business owner and a buyer.
So, what does that look like in practice? Here is what a business broker does, how they can help you evaluate your options, and what to consider before hiring one.
What Is a Business Broker?
A business broker is an advisor who helps facilitate the purchase or sale of a privately owned business. A broker may represent a seller, a buyer, or, depending on the circumstances and applicable rules, both parties. Before engaging a broker, it鈥檚 important to understand whom they represent and how their responsibilities are defined.
For a business owner considering a sale, a broker typically helps assess the company鈥檚 value, prepare it for market, identify and qualify prospective buyers, and guide negotiations through closing. The scope of services varies by firm and engagement.
At 91探花 Mergers & Acquisitions, our business broker services help owners navigate a sale while continuing to manage the business.
What Does a Business Broker Do?
A business broker鈥檚 work begins well before a buyer makes an offer and continues through the closing process. Here are some of the responsibilities a seller can expect an advisor to handle:
Assess the Business and Its Value
One of the first questions most owners ask is, 鈥淲hat is my business worth?鈥� A business valuation helps establish a realistic understanding of the company鈥檚 potential market value based on factors such as financial performance, industry, operations, and market conditions.
An advisor will also consider factors that influence how buyers may view the business. For example, a company with a strong management team, a diverse customer base, and reliable financial records may appeal to buyers differently than one that depends heavily on its owner or a single customer.
A valuation is a starting point for a sale strategy, not a guarantee of the final sale price. The eventual outcome also depends on buyer interest, deal terms, financing, due diligence, and other transaction-specific factors.
Prepare the Business for Market
Before approaching buyers, a broker works with the owner to understand the business and organize the information prospective buyers will need. This may include reviewing financial records, discussing operations and growth opportunities, and identifying potential concerns that could affect a sale.
The advisor then develops materials that explain the business to buyers. These often include a confidential information memorandum, or CIM, which gives qualified buyers a more complete picture of the company鈥檚 financial performance, operations, and opportunities.
Preparation is essential because buyers need reliable information to evaluate an opportunity. Identifying questions or concerns early also gives the owner and advisor time to address them before they disrupt negotiations.
For a closer look at the early stages of this work, see what a broker does week by week.
Protect Confidentiality
Most owners do not want employees, customers, competitors, or vendors to learn that their business is for sale before the appropriate time. An unexpected disclosure can create uncertainty and affect the day-to-day operations of the company.
A broker helps manage confidentiality by controlling how the business is presented and how information is shared. For example, initial marketing materials may describe the opportunity without identifying the company. Interested buyers can then be screened and asked to sign a non-disclosure agreement before receiving more sensitive details.
Confidentiality agreements and controlled disclosure reduce risk, although no process can guarantee that information will never be disclosed. Your advisor should discuss the safeguards they use and how they will handle outreach to potential buyers, particularly competitors.
Find and Qualify Potential Buyers
A business broker develops a strategy for reaching buyers who may be interested in the company and have the resources to pursue an acquisition. Depending on the business, those buyers might include individuals, existing companies, private equity groups, or other investment groups.
The goal is not simply to generate the largest number of inquiries. It is to connect with buyers whose financial capabilities, experience, and objectives make them realistic candidates for the transaction.
A broker can screen inquiries, coordinate confidentiality agreements, answer initial questions, and help determine which buyers are ready for more substantive conversations. This process can save an owner time and limit unnecessary disclosure of sensitive information.
Evaluate Offers and Negotiate Terms
A purchase offer involves more than a price. Your advisor can help you compare the terms, assess the buyer鈥檚 ability to complete the transaction, and understand how each proposal aligns with your goals.
For example, consider two offers with similar headline prices. One may depend heavily on future performance or seller financing, while another may provide more cash at closing. The offers could also differ in the buyer鈥檚 plans for employees, the owner鈥檚 future involvement, or the conditions that must be met before closing.
A broker helps you look at the complete picture and negotiate with those differences in mind. Your attorney, CPA, and other advisors also play important roles in evaluating the legal, tax, and financial implications.
Help Manage Due Diligence and Closing
Once an offer is accepted, the buyer typically conducts due diligence: a detailed review of the business鈥檚 financial, legal, and operational information. This stage can involve substantial document requests, questions, and coordination among the parties.
A broker helps keep the process moving by communicating with the buyer and coordinating with the owner and other advisors. They may also assist with discussions related to financing, transaction documents, and issues that arise before closing.
The business owner remains involved throughout the process and makes the final decisions. The broker鈥檚 role is to provide guidance, facilitate communication, and help the parties work toward a completed transaction.
Business Broker vs. M&A Advisor: What Is the Difference?
The terms business broker and M&A advisor are sometimes used interchangeably, and their services can overlap. Generally, business brokers are associated with selling businesses below $10 million in enterprise value, while M&A advisors may focus on larger or more complex transactions.
The value distinction isn鈥檛 absolute, though, because a transaction鈥檚 complexity depends on more than its size. The type of buyer, financing, ownership structure, industry, and seller鈥檚 goals can all affect the process and the expertise needed.
Some firms, including 91探花, provide both business brokerage and M&A advisory services. Rather than choosing an advisor based on title alone, look at their experience with businesses and transactions similar to yours, their approach to finding buyers, and the support they provide through closing.
How Can a Business Broker Help Maximize Value?
A broker cannot promise a particular sale price or create value where it does not exist. They can, however, help an owner present the business effectively, reach qualified buyers, and manage a process designed to support a strong outcome.
One way to do that is by attracting interest from more than one qualified buyer. Multiple offers can give a seller options and negotiating leverage. They can also reveal differences in how buyers view the opportunity and what they are willing to offer.
That said, multiple offers are not guaranteed, and the highest offer is not automatically the best one. A buyer鈥檚 financing, proposed deal structure, likelihood of closing, and plans for the business may be just as important to the seller as the price.
An experienced advisor helps the owner weigh those factors together and pursue the offer that best fits their priorities.
Can I Sell My Business Without a Broker?
Yes, owners can sell their businesses independently, and some may already have an interested buyer. Even so, it鈥檚 important to understand the stakes and the work involved before deciding how to proceed.
A sale requires time and attention while you are still responsible for running the business. You may need to determine an appropriate value, prepare information for buyers, manage confidentiality, assess their financial qualifications, negotiate terms, and coordinate due diligence.
An advisor brings transaction experience and a process for handling those responsibilities. A broker may also help an owner explore a broader pool of buyers, even when an initial prospect has already expressed interest.
The right approach depends on your business, your experience, and your goals. For a more detailed comparison, read selling a business yourself vs. hiring a broker.
Talk With a Business Broker About Your Goals
Whether you are ready to sell or simply exploring what a future transition might look like, a conversation with an experienced advisor can help you understand your options.
91探花 Mergers & Acquisitions works with business owners to assess value, develop a sale strategy, connect with qualified buyers, and navigate the transaction process. Contact our team to discuss your business and your goals.
Frequently Asked Questions About Business Brokers聽
How do business brokers get paid?
Business brokers are often paid a commission, sometimes called a success fee, when a transaction closes. Some firms may also charge other fees, depending on the services provided and the terms of the engagement.
Before signing an agreement, ask for a clear explanation of all fees, when they are due, and what happens if the business does not sell. Fee structures vary, so review the agreement carefully and discuss any questions with your advisor.
When should I contact a business broker?
You do not have to be ready to sell immediately to start a conversation. Speaking with an advisor before you plan to go to market can help you understand your business鈥檚 potential value, identify factors that may affect a future sale, and consider your timing.
If you already have a buyer in mind or are ready to sell, an advisor can also help you assess your options and determine the next steps.
Does a business broker replace my attorney or CPA?
No. Your broker, attorney, and CPA have different roles. A broker helps manage the sale process, coordinates your other counsel and advisors, and facilitates negotiations. Your attorney advises you on legal matters and transaction documents, while your CPA or tax advisor helps you understand financial and tax considerations.
These advisors can work together to help you evaluate decisions throughout the transaction.
How do I choose a business broker?
Look for an advisor who understands businesses like yours, can explain their process clearly, and takes time to understand your goals. Ask about their experience, how they identify and qualify buyers, their approach to confidentiality, and how they communicate with clients.
You should also understand the engagement agreement, including fees and the services covered. These questions to ask before hiring a business broker can help you start the conversation.