How Does a Business Broker Make Money? | So-Cal Business Brokers

Since you clicked on this post, there is a good chance you already know who a business broker is. This post will, therefore, not dwell too much on what a business broker is and what he or she does. Our focus will be answering the question on how does a business broker make money?

The primary role of a business broker in San Diego is to help with the sale or purchase of a business. They do not do this for free. Brokerage firms are business entities. They have to make money. But how does a business broker make money? There are three ways a business broker makes money.

Charging a commission

The majority of business brokers get paid through commissions. The commission is based on an agreed percentage. This is usually upwards of 5 percent the total value of the brokered deal. The percentage fee is charged by brokers where a lot of work is involved. It is good to note that you may be required to pay a down payment before a broker agrees to sell your business. The purpose of the down payment is first to show commitment and second to help the broker meet the initial costs of getting your business listed.

Flat fees

This is yet another way business brokers charge for their services. This option is considered when the sale is not a high-value transaction. When charging a flat fee, you will have to negotiate with the business broker before they start selling your business. The size of the fee charged will depend on the amount of work that will be needed to complete the transaction.

Seller concession

This arrangement looks a lot more like commissions or fees. The only difference is that the seller is the one that sets the concession. The broker decides whether to accept your offer or not. Keep in mind that you are less likely to get the best business broker in San Diego when using this approach.

As you can see, there are various methods used when charging clients. That is why business broker’s salaries vary. Some analysts place the salary of a broker in the range of between $95,000 and $200,000. Before you commit to a business broker, make sure you understand all the terms. Some brokers add clauses that force you to pay them even when you sell the business on your own or through another brokerage firm. Read every clause in the contract before you agree to anything.

How Does a Business Broker Make Money

What Client’s Say

We Couldn’t Be Happier

"When we thought about selling we had no idea what our business was worth or how to go about selling. What you were able to do was to cut through the fog so that we understood the valuation issue and had a comfort level with the process. As you know we ended up selling for somewhat more than the original valuation and we got all cash and our CPA loved the way our tax liability was minimized. We couldn’t be happier!"

Over $250,000 More

"Our first contact with you shocked us when you suggested that we wait 18 months before selling because you believed that if we hit our projections that the value would be significantly greater. As it turned out we not only followed your advice but also got slightly over $250,000 more than we originally had hoped for. It is seldom that we have had the opportunity to deal with a firm that doesn’t want both money and a commitment NOW. It was clear and obvious that you had our best interests at heart."

You Got the Valuation We Agreed On

"You did a great job on the sale of our business in really beating the bushes for buyers, including a UK company that was an active suitor. You managed to get the valuation that we had all agreed upon and got it substantially all in cash and got the transaction closed with little to no problems or expensive lawyers involved."

Thank You for Handling Our Business

"Our business was smaller than what your firm normally handles but it was a BIG part of our net worth and savings. Thank you for handling our business and we were very pleased and delighted with the results."

More Than Anticipated

"Our transaction was involved as we had different corporate entities located in different states. Our only regret is that we didn’t retain your services before 2012 when we paid $25,000 to a firm in Texas that did a valuation and market analysis for us before then failing to do anything in the way of trying to sell our business. You got it sold for more than anticipated."

Charging a commission

Flat fees

Seller concession

The Sales Process