A business broker is a licensed intermediary who represents business sellers — finding buyers, managing the marketing process, fielding inquiries, coordinating due diligence, and shepherding a transaction from listing to close. In exchange for this service, brokers charge a commission: typically 8–12% of the sale price on deals under $1M, and 5–8% on larger transactions. For a business that sells for $750,000, that commission is $60,000–$90,000. Whether that commission is worth it depends entirely on what the broker actually delivers — and on whether a seller's specific situation demands their capabilities or whether a direct-to-market approach would produce an equal or better outcome. This guide explains what business brokers do, how they are paid, how to find one, and how to decide whether you need one.
What a Business Broker Actually Does
Business brokers perform five core functions in a business sale:
1. Valuation and pricing. The broker evaluates the business — reviewing financials, normalizing earnings, and comparing to recent comparable transactions — to produce an asking price. This is rarely a formal certified valuation; it is a broker opinion of value (BOV) informed by the broker's transaction experience in the market. A good BOV is grounded in defensible comparables. A poor one is whatever number the broker believes will get you to sign a listing agreement.
2. Preparation and packaging. The broker prepares a Confidential Business Review (CBR) or Confidential Information Memorandum (CIM) — a document package that presents the business to potential buyers. It includes financial summaries, a business description, an industry overview, and the seller's normalized earnings. The quality of this document significantly affects the caliber of buyer inquiries.
3. Buyer sourcing and marketing. The broker lists the business on platforms (BizBuySell, BizQuest, DealStream), markets to their buyer database, and in some cases reaches out directly to strategic buyers or private equity firms in the relevant sector. This outreach quality varies widely between brokers — some maintain active buyer databases with thousands of qualified contacts; others post a listing and wait.
4. Buyer screening and deal management. The broker qualifies incoming buyer inquiries — verifying financial capability, signing NDAs, providing the CIM to qualified prospects — and manages the pipeline of buyer conversations so the seller is not consumed by fielding unqualified calls.
5. Negotiation and transaction coordination. The broker negotiates the letter of intent with the buyer, coordinates due diligence, and manages the handoffs between attorneys, lenders, and accountants through to close. Experienced brokers who have closed dozens of transactions know where deals get stuck and how to keep them moving.
How Business Brokers Are Paid
Understanding the business broker fee structure is essential before signing any listing agreement.
Commission-only (most common for deals under $5M): The broker earns nothing unless the business sells. The commission is a percentage of the total sale price, paid at close from the seller's proceeds.
Typical commission ranges:
| Sale Price | Typical Commission Rate | Approximate Commission |
|---|---|---|
| Under $500K | 10%–12% | $50,000–$60,000 on a $500K sale |
| $500K–$1M | 8%–10% | $40,000–$100,000 |
| $1M–$3M | 6%–8% | $60,000–$240,000 |
| $3M–$10M | 4%–6% | $120,000–$600,000 |
| Above $10M | 2%–4% (often Lehman scale) | Varies |
The Lehman formula (and its variants) is commonly used for larger transactions: 5% on the first $1M, 4% on the second $1M, 3% on the third, 2% on the fourth, 1% on everything above $4M. Different brokers use different variants — double-Lehman is common in mid-market.
Retainer + success fee: Some mid-market M&A advisors charge an upfront retainer ($5,000–$25,000) plus a lower success fee. The retainer covers initial packaging work and demonstrates buyer commitment to a quality process.
What the commission does not cover: In most broker agreements, the seller still pays their own legal fees ($5,000–$30,000+ depending on deal complexity), accounting fees, and any preparation costs. The broker commission covers the broker's work — not the full transaction cost. For a complete picture of what selling a business costs, see how much it costs to sell a business.
The dual-agency problem: Most business brokers represent the seller. But in many small business transactions, the broker also works with the buyer — showing them the listing, helping them understand the business, and sometimes helping structure their offer. This dual representation creates a conflict of interest. Ask any broker you interview: do you represent the buyer or the seller when you've found your own buyer? The answer matters.
Types of Business Brokers: Who Handles What
Not all business brokers work in the same market or offer the same service level. The broker you need depends on the size and type of business you are selling.
Main-street business brokers specialize in small businesses — typically those with enterprise values under $2M. They handle restaurants, retail shops, service businesses, small franchises, and the full spectrum of owner-operated small businesses. Main-street brokers often work with local listings, know their regional market well, and maintain databases of local buyer candidates.
Mid-market M&A advisors operate at a different level — typically businesses with $1M–$50M in EBITDA. They run structured sale processes (sometimes auctions), prepare investment-grade CIMs, and solicit bids from private equity buyers, strategic acquirers, and family offices. They charge higher fees but manage more competitive sale processes that can drive price meaningfully above what a simple broker listing would achieve.
Industry-specialist brokers focus on a specific sector: dental practices, medical practices, veterinary clinics, automotive businesses, or similar verticals. These brokers maintain buyer databases within the specialty, understand sector-specific valuation metrics, and often have relationships with the industry's most active acquirers. For certain healthcare verticals — dentistry, physical therapy, behavioral health — a specialist broker with a DSO or PE buyer network often outperforms a generalist.
Franchise brokers specialize in franchise resales and new franchise placements. For sellers exiting a franchise unit, a broker who understands the franchisor's transfer process, the FDD requirements, and the specific buyer pool for that franchise system is more valuable than a generalist. See how to sell a franchise business for how this process differs.
Major national broker networks: Sunbelt Business Brokers, Transworld Business Advisors, Murphy Business Brokers, and VR Business Brokers are the largest networks with offices across the country. Local independent brokers — often former business owners or M&A professionals — operate alongside them. National networks offer brand recognition and shared buyer databases; independent brokers offer local market knowledge and often more seller attention.
How to Find a Business Broker Near You
Finding a qualified business broker in your market requires more than a Google search for "business brokers near me." The brokerage industry is not uniformly licensed or regulated — standards vary significantly by state — so evaluating quality requires direct assessment.
Step 1: Identify your business size and type. A $350,000 restaurant needs a different broker than a $4M HVAC company. Knowing your approximate value range (see how to value a business) narrows the field to brokers who work in your segment.
Step 2: Get referrals from your professional network. Your accountant, attorney, and banker have worked with business brokers. They know who closes deals and who ties up sellers in exclusive agreements while generating no buyer activity. Referrals from trusted professionals are the most reliable screening mechanism.
Step 3: Check industry associations. The International Business Brokers Association (IBBA) and the M&A Source maintain member directories searchable by state. The IBBA's Certified Business Intermediary (CBI) designation indicates a broker who has passed an ethics and competency standard. It is not a guarantee of quality, but it is a baseline.
Step 4: Interview at least three brokers. Before signing a listing agreement, get comparative opinions from at least three brokers. Ask each: - How many businesses in my sector and price range have you sold in the last 12 months? - What is your average time-on-market? - How many active buyers are in your current database? - What is your marketing plan beyond the major listing platforms? - How do you handle dual representation if you bring the buyer? - What is your listing agreement term and what happens if I want to terminate early?
Step 5: Verify the listing agreement before signing. Most broker listing agreements are exclusive — meaning you cannot hire another broker or sell the business yourself without owing the original broker a commission. Exclusivity periods typically run 6–12 months. A one-year exclusive with a broker who generates no buyer activity is a year of market exposure lost. Negotiate a 6-month initial term with a 30-day cancellation provision after 60 days if performance benchmarks are not met.
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The honest answer: it depends on the size and complexity of your deal, your experience with sales processes, and your opportunity cost.
When a broker is worth the commission: - Your business is priced under $1M and you have no existing buyer relationships. Main-street buyers in this range rarely come from the seller's personal network — they find businesses through broker platforms and databases. - Your business is complex (multiple revenue streams, licensing requirements, regulated industry) and the transaction requires coordination that you cannot manage alongside running the business. - You are in a market where the broker maintains genuine relationships with active buyers — not just a listing platform presence. - You cannot afford the time distraction. A business sale requires constant attention: fielding buyer inquiries, preparing for due diligence, managing lender requests. Sellers who attempt this while running the business often see operational performance decline, which creates the worst possible dynamic during buyer due diligence.
When selling without a broker makes sense: - You have an identified buyer — a competitor, a key employee, or someone in your industry network — and the transaction is essentially a bilateral negotiation rather than an open-market process. - Your business is in the $2M–$10M range with a clear buyer profile (private equity, strategic acquirer) and you can run a targeted outreach process or use a marketplace like DealFlow OS to reach those buyers directly. - You are comfortable with the process — you have sold a business before, or you have strong advisors (M&A attorney, CPA with transaction experience) who can provide the guidance a broker would otherwise supply. - You are unwilling to pay 8–10% commission on a $600K sale when the same platforms a broker uses are accessible to you directly.
For a step-by-step walkthrough of the full sale process — whether you use a broker or not — see how to sell a business.
Questions to Ask Before Signing a Broker Agreement
The listing agreement is a binding contract. These are the questions that separate prepared sellers from those who discover the problem 8 months into an unproductive exclusive.
About the broker's track record: - How many businesses in my industry and price range have you sold in the last 24 months? (Ask for a list, not just a number.) - What was the average time on market for your last 10 closings? - What percentage of your listings sell? (Industry average is roughly 20–30%; brokers who sell 40%+ of listings are outperforming.)
About the listing agreement: - What is the listing term and how can I terminate if the relationship is not working? - Is the agreement exclusive? Can I sell to a buyer I identify myself without owing commission? - What happens if I receive an offer from a buyer I brought to the table? - Are there any tail period provisions — periods after the agreement ends during which the broker still earns commission if a buyer they introduced closes?
About their process: - Beyond the listing platforms, how will you actively market my business? Who specifically on your buyer database will you contact, and how? - Will you be handling my listing personally, or will it be handed to an associate? - How do you screen buyers for financial qualification before they receive confidential information about my business?
About their valuation: - How did you determine your suggested asking price? What comparable transactions are you referencing? (Ask for the comps — not just the conclusion.) - Does your suggested asking price include real estate? Equipment? Working capital?
A broker who cannot answer these questions precisely and specifically — who deflects with generalities — is telling you something important about how they will handle your listing.
Frequently Asked Questions
What does a business broker do?
A business broker represents sellers in the sale of a business. Their core functions are: valuing the business and setting an asking price, preparing marketing materials (CIM or CBR), listing the business on platforms and marketing to their buyer database, screening and qualifying buyer inquiries, negotiating the letter of intent, and coordinating due diligence and closing. In exchange, brokers earn a commission — typically 8–12% of the sale price for businesses under $1M, and 5–8% for larger transactions.
How do I find a business broker near me?
To find a business broker in your area: (1) ask for referrals from your accountant, attorney, or banker — they work with brokers and know who closes deals; (2) search the IBBA (International Business Brokers Association) directory for CBI-certified brokers in your state; (3) contact the major broker networks (Sunbelt, Transworld, Murphy) for a local office referral; (4) interview at least three brokers before signing an exclusive listing agreement.
How much do business brokers charge?
Business broker commissions typically range from 10–12% for businesses selling under $500K, 8–10% for deals between $500K and $1M, and 5–8% for mid-market transactions above $1M. Some mid-market advisors charge an upfront retainer ($5,000–$25,000) plus a lower success fee. Commissions are paid at close from the seller's proceeds. The broker commission covers the broker's work only — not legal, accounting, or other transaction costs.
Do I need a business broker to sell my business?
Not necessarily. A business broker adds the most value in main-street deals (under $1M) where the seller has no existing buyer relationships and needs the broker's buyer database and platform presence. For sellers with an identified buyer, a business in a narrow niche with a clear PE or strategic buyer profile, or sellers who are comfortable running a process with good advisors, going directly to market — through a platform like DealFlow OS or direct outreach — can produce equivalent or better outcomes without the 8–12% commission.
What is the difference between a business broker and an M&A advisor?
Business brokers primarily handle smaller transactions — typically under $5M in enterprise value — through listing platform exposure and local buyer databases. M&A advisors (investment bankers) handle mid-market and larger deals, running structured sale processes with targeted outreach to institutional buyers (private equity, strategic acquirers). M&A advisors prepare investment-grade documents, often run competitive auction processes, and charge higher fees but frequently generate higher prices on transactions above $5M through competitive buyer tension.
What is a business broker's commission on a $1 million sale?
On a $1 million business sale, a business broker typically earns 8–10% commission, which equates to $80,000–$100,000. The exact rate depends on the broker, the complexity of the deal, and the negotiating position of the seller. Some brokers negotiate commission rates with sellers who bring strong preparation, clean financials, and a realistic asking price — as these factors reduce the broker's work and timeline risk.
A business broker can be the difference between a sale that closes at full value and one that languishes on the market for 18 months. They can also be an expensive intermediary between you and a buyer pool you could access directly. The honest assessment requires evaluating your specific situation: the size of your business, the complexity of the transaction, your existing buyer relationships, and your willingness to manage the process yourself. If you hire a broker, sign a short listing term with clear performance expectations and understand the dual-representation dynamics of your agreement. If you decide to go direct-to-market, use the same tools and platforms brokers use — and get qualified legal and financial advisors involved before you accept an offer. For the complete step-by-step sale process that applies whether you use a broker or not, see [how to sell a business](/blog/how-to-sell-a-business). For the full cost picture including commissions, legal fees, and tax implications, see [how much it costs to sell a business](/blog/cost-to-sell-a-business).
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