A business broker is a third-party negotiator who works with the buyer, seller, or both, in the sale of a business. When a business is being sold, business owners will usually turn to business brokers in order to secure the most profit for their business. On the other hand, a seller will look to a business broker to save on the purchase of their prospective business.
This puts a business broker in the unique position of finding the middle ground between buyer and seller. Becoming a business broker requires savvy, charm, a good head for numbers, and a trustworthy personality.
With potentially large commissions and a healthy market, business brokers have access to numerous perks. Here are 2 of the most important benefits to becoming a business broker.
Big Transactions Equal Big Commissions
For sales of large businesses, most brokers will apply a sliding fee on their sales transactions, meaning their commission percentages get smaller as the final sale figure gets larger. For example, a business transaction that is between $1 million and $5 million can yield a commission of 5%, while anything between $5 million to $10 million can yield 4% commission. Smaller transactions generally carry a standard 10% success fee. All of this, of course, depends on the broker’s negotiation skills.
One thing to understand when you become a business broker is that sales usually take time, with some transactions taking several months to complete. To mitigate their expenses, some brokers can charge clients up-front retainer fees or monthly fees.
An Industry with Steady Growth
Despite the recession almost a decade ago, business brokerage remains a healthy industry, enjoying an average 6% growth every year for the past 5 years.
With improvements in financing, as well as an aging population that is eager to sell their businesses for their retirement, business brokerage continues to be a stable industry.
Being a business broker requires determination, skill, and most importantly, patience. With the right attitude, know how, and maybe the help of a franchise, business brokerage can be a rewarding and exciting profession.