A Business Broker is a professional who assists others to buy and sell businesses. A business broker is also known as a business transfer agent. A business broker with experience of 1-4 years can earn an average total of $50,980 for 5 salaries, while a mid-level business broker can earn an average total of $73,698 for 7 salaries. A well-experienced broker with more than 10 years of experience can earn $80,369 based on 9 salaries.
- A business broker helps a business to facilitate the sale of the business
- A business broker ensures a smooth sale for both buyer and seller
- One key responsibility of a business broker is to help a client to decide the most probable selling price (MPSP) value of the business
- A business broker coordinates the negotiations with the buyer and compiles an effective plan to complete the deal
What Do Business Brokers Do?
Usually, a business broker is responsible for assisting a business and facilitating the sale of the business. The work of a business agent is like a real estate agent assisting the buyer and seller of a private business. The assistance can be done before, during, and immediately after the sale of the business. Here, a business broker takes full responsibility for selling the business. He must ensure a smooth sale for both buyer and seller. If a business broker successfully sells a business then he will receive a percentage of the sale price of the business as payment for the service that he provided. The commission rate usually varies depending on the negotiation or current market rate.
A business broker needs a broad skill set. He/she must have communication skills, negotiation skills, technical knowledge, financial and tax-related knowledge, time management skills, organizational skills, and many more. A broker must have these skills to secure the client. He has to convince both the seller and the buyer and successfully complete the deal. If a business broker is working under a firm then he/she will get the prospect list from the company. However, if the business brokers are working independently then they have to generate their own business prospects. For an entry-level position as a business broker, a bachelor’s degree is required.
Services A Business Broker Provides
A business broker can provide a variety of services depending on their skills, experience as well as client requirements. The most common services provided by a broker to a client are:
1. Help a client to decide the Most Probable Selling Price (MPSP) value of the business
2. Evaluate a company’s tax returns for up to 3 years and prepare an adjusted cash flow statement for buyers to review
3. Create a 15-30 page comprehensive Information Memorandum of the company to show the buyer
4. Research the market and make a list of potential buyers for the business
5. Create a marketing policy to have the full exposure of the business to prospective buyers
6. Analysis of the potential clients to see the ability of buyers and if they will be able to complete the purchase
7. Coordinate the negotiations with the buyer and compile an effective plan to complete the deal
8. Provide overall deal management service and help the client through the entire process
9. Maintain the confidentiality of the sale
10. Based on the clients need to provide the hourly consultant with fees
11. Provide acquisition and deal sourcing services to acquirers and investors
12. Listing the business for sale to the public
13. Protect the confidentiality of a business
14. providing the seller with a business condition disclosure form, and other forms which may be needed
15. Negotiating price on behalf of the sellers
How The Commission Is Earn By A Business Broker
The job of a business broker is to assist a business and help a deal from the start to finish. Usually, the service of a business broker is paid with a percentage from the sale. There is no regulation that sets the price or the commission rate for a business broker. However, most business broker charges a 10% commission from a successful sell/deal.
Though this commission rate is not fixed, it can vary depending on the business type, location of the business, size of the business, etc. For example for a business like gas stations, grocery stores, and hotels the rate will be less.
Top 10 Highest Paying Cities For Business Broker In The USA
Here is a list of the top 10 cities with the highest paying commission rate for business brokers:
|City||Annual Salary||Monthly Pay||Weekly Pay||Hourly Wage|
|Santa Rosa, CA||$157,467||$13,122||$3,028||$75.71|
|New York City, NY||$148,091||$12,341||$2,848||$71.20|
|San Mateo, CA||$147,092||$12,258||$2,829||$70.72|
Top 5 Business Broker Jobs In The USA
|Job Title||Annual Salary||Monthly Pay||Weekly Pay||Hourly Wage|
|Real Estate Broker||$100,514||$8,376||$1,933||$48.32|
|Security Broker Dealer||$97,382||$8,115||$1,873||$46.82|
|Broker Dealer Accountant||$95,210||$7,934||$1,831||$45.77|
FAQs About Business Broker
1. How Do Brokers Make A Commission?
This question is very common among people who are new to this industry. Generally, a broker earns money in two ways. If a broker is working for an agency then he/she will get a percentage of the commission from the agents they sponsor. If a broker is working independently then he/she will get the full commission from the sale.
2. What Is A Selling Commission?
A selling commission is a fee that is paid to a selling agent for the services it provides to the seller. Generally, a broker performs on behalf of the seller and completes the deal. Then the broker will get the commission from the sale.
3. What Is The Brokerage Amount?
A brokerage amount or a brokerage fee is a fee that a broker charges to execute transactions or provide services. The services include financial services, insurance, real estate, and delivery services.
4. Are Broker Fees Negotiable?
Yes, broker fees are negotiable. The average commission for a broker is 10% and you can negotiate this rate. Generally, this rate is split between the listing agent and the buyer’s agent.
5. Which Is Better Ameritrade Or ETrade?
Among the online brokers, Ameritrade is better than ETrade. TD Ameritrade has the ultimate package for investors including $0 trades, fantastic trading platforms, excellent market research, industry-leading education for beginners, and reliable customer service.
6. Who Are The Best Boutique Brokers?
Here is a list of some of the best Boutique Brokers in this industry:
3. First Choice Business Brokers
4. Houlihan Lokey
5. Sandler O’Neill and Partners
6. Rothschild & Co
7. Goldman Sachs
8. J.P. Morgan
9. Morgan Stanley
7. How Do You Become A Business Broker In Florida?
If you want to start your career as a business broker in Florida then you have to be at least 18 years old and you must have a high school diploma or GED. If you fulfill these criteria then you will need a general real estate broker license. Depending on the process it might take 2 to 5 years to obtain a Florida broker license.
8. How Do I Become A Business Broker In The UK?
You won’t require any qualifications to become a business broker in the UK. So that means you can start your own broker business having zero knowledge about it. Moreover, you don’t have to be part of any “professional association” to do broker business in the UK.
9. What Skills Do You Need To Be A Broker?
Here is a list of skills that you must possess if you want to be a successful business broker. They are:
1. Confident negotiation skills
2. Reliability and honesty
3. Excellent time management
5. Analytical skills
6. Accuracy and attention to detail
7. Interpersonal skills
8. Verbal and written communication skills
Last Updated on October 23, 2022 by Magalie D.
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.