Selling a Business: The Value of a Broker
21 July 2025: Selling a Business: The Value of a Broker
If you’re selling a business, should you use a business broker?
Well, given that we’re professional business brokers and advisors, it’s probably not very difficult to figure out on which side of this debate we fall.
But the real issue here is “why”; why you should use a professional broker.
As you can probably imagine, brokers in the Worldwide Business Brokers network have this discussion with business owners every week – whether at an initial meeting to discuss the possible sale of the owner’s business, a Chamber of Commerce business get-together or even at a chance meeting at the local 7-11. I’ve personally had this discussion in the gym – more than once, in fact. A business owner asks about the process of selling a business and BOOM – we’re off to the races!
Thursday, 24 July in The Brokers Roundtable℠, we’re doing a Live Stream with Miranda Kalvaria, VP of Transactions with Teamshares, buyer of small businesses. Unlike PEGs, Teamshares, which has acquired more than 100 such businesses, holds them long term.
Brokers and Realtors, join us in The Brokers Roundtable℠ on the 24th (3 PM EDT) for a live discussion and Q&A to learn how Teamshares could be the buyer for the business(es) you’re selling. Like all our Live Streams, this one is FREE to Members of The Brokers Roundtable℠. Not yet a Member? You can join here.)
Some business owners think that handling the sale themself – sometimes referred to as a “private listing”; though more often as a FSBO (For Sale By Owner) – has some advantages over listing with a business broker. Let’s look at some of these so-called advantages – and their more than counter-balancing disadvantages.
Using a Professional Broker: For and Against
Control of the marketing and advertising. I’ve heard a weird argument that a private listing allows the business owner to control the marketing of their business. Supposedly, this approach will enable the seller to maintain a greater level of confidentiality during the process.
But a private listing will get only a fraction of the exposure that listing with a broker will give it because professional brokers not only cast a wide net when looking for buyers but also have lists of buyers in their databases from the get-go. The more people aware of the opportunity, the more likely the sale – and more likely at a more favorable valuation.
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We offer a comprehensive coaching program – both group coaching in our Brokers’ Roundtable℠ community as well as one-on-one coaching – tailored to Realtors, business owners , buyers and anyone interested in valuing, buying or selling a business.
To learn more, check out Resources in The Brokers Roundtable℠
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Managing the due diligence process. A private listing supposedly gives the business owner an advantage by managing the due diligence process themselves. Oh, yeah?
In the nearly 25 years since founding Worldwide Business Brokers, I’ve yet to hear of any business owner that understands the scope of a buyer’s due diligence, let alone has the time and zen-like personality to manage it. The due diligence process is often extremely invasive and many owners take offense at the questions buyers ask or proof of some claim that buyers request. This can completely derail a potential deal. Business brokers do this all the time and the properly trained ones know well how to manage the process.
Setting the offering price. Business owners are notorious for having an exaggerated opinion of the value of their business. An over-priced business is one of the three primary reasons most businesses that come to market don’t sell. We’ve seen this dozens of times throughout the years.
Getting a professional to value the business and then advising how to price it dramatically increases the likelihood of a successful outcome. Right now, near our headquarters is a business that we did a “thumbnail” or cursory valuation for back in 2017. The owners were divorcing. The husband stated that he felt the business was worth $2 million. A superficial look at the financials suggested it may have been worth maybe $750,000. In due course we received an email from the owner announcing that he’s selling and “If you have any buyers….”. A “private listing”. He wanted $1.85 million.
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About eight months later, the price was down to $1.6 million. Six months after that, it was $1.4 million. A few months after that drop, he listed the business with a residential real estate agent (to save a couple of commission points) – who immediately uploaded the listing to the regional MLS where no one in the history of the world has ever gone to look for a business to buy – at $1.2 million. Six months after that, that agent contacted us to see if we might have a buyer and maybe help him sell. After providing a brief education to the agent, he said he would meet with the owner to “have a discussion on price.”
Since then, the owner has switched real estate agents at least four times and even erected a 4 X 8 sign on the highway in front of the business announcing that he was retiring and wanted to sell. The business is still listed in the local MLS, now at $1.4 million.
Listing a business with real estate – no matter how good that agent is at selling houses – agent is tantamount to getting your knee replaced by your auto mechanic – no matter how good that mechanic is at replacing brakes. The chances of success are vanishingly small as is illustrated by this true story. It has been eight years since the owner first contacted us.
FSBOs
Private listings are free. Huh? Private listings are “free” only if the seller’s entire marketing effort consists of telling his or her friends over a couple of beers that their business is for sale. Anything even modestly more serious than that will cost something. (Admittedly, listing your business with a real estate agent is also “free” – except for the cost to the business’ value of throwing confidentiality overboard and to guarantying almost no exposure to anyone even remotely interested in buying a business.)
Some business brokers operate similar to real estate brokers in that they assume the cost of marketing – which means the broker is financing the cost of that marketing – at least when listing a small businesses. The seller will repay the broker at closing when the broker recoups his or her marketing expenses via the earned commission or success fee.
FISBOs: The owner trying to sell the business themself will save the broker’s commission. This always gets a laugh around our offices because we’ve seen the futile efforts business owners make all the time. When this is the reason an owner tries to sell his business himself, we have to ask, “Is the objective to sell the business or to not pay a broker anything?”
If you list your business yourself, you will certainly not have to pay a broker anything. But history and experience both suggest that you’re also highly unlikely to sell your business. A related question: Would you try to sell you house without a broker? Granted, some homeowners would but the number is small.
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REALTORS! Our course, “Learn How to Value and SUCCESSFULLY Sell Businesses“, teaches you how to accurately value and successfully sell businesses.
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The Real Issue
Business owners who try to sell their business themselves rarely have any idea what selling a business entails.
If they stop and think for a moment – and we point this out whenever the topic comes up – the only way they can productively market and sell their business is if they effectively stop running that business.
Try to imagine the amount of time it takes to put together a marketing plan and the required collateral pieces, and creating and uploading content for a web presence. Imagine having to respond to every Larry, Moe and Curley that calls or emails to discuss the business. Think about the vetting process and the number of tire-kickers the owner will have to weed through. And imagine the amount of time needed to assemble all the data that a buyer will need for due diligence. The vast majority of business owners can’t even come up with a list of that data.
And none of this even begins to address confidentiality.
Unless your business is running on auto-pilot – you’re spending 29 days of each month drinking piña coladas on a beach in French Polynesia and the remaining day in the office – no business owner has the time to both run and sell their business. Those that try will almost certainly see the business begin to falter – at a time when peak performance is the only way to achieve maximum value.
There are, of course, many other terms of any deal that must be negotiated.
Length of the due diligence period; hold-backs for certain contracts or performance metrics; inventory issues; the closing date and conditions; non-compete periods; representations and warranties by the seller; the transfer of the intellectual property (“IP”) – and dozens more – are all part of the process of the negotiation.
But it has been our experience that once the parties realize that they share common interests in getting to “done”, suspicions begin to disappear and a sense of “reasonableness” seems to begin to settle over the parties and on the process. (Watching this transition take hold is one of the most rewarding aspects of being a business broker or advisor.)
The Bottom Line
There are, of course, occasional success stories of sellers selling their own business without the involvement of a broker. But many such instances involve strategic acquisitions in which the acquiring company approaches the business owner directly.
In fact, this is essentially what happened to me more than 25 years ago.
My business wasn’t for sale but I was approached buy a small group of investors that wanted to buy it. I didn’t even think about getting a broker to represent my interests – or to even establish what the business was worth, a fact the suggests I might have left some money on the table.
But when I remember that event, I remember clearly how busy I was just running the business. I can’t for a moment imagine trying to sell it by myself.
“If you want to go fast, go alone. If you want to go far, go together.”
– African Proverb
If you have any questions or comments on this topic – or any topic related to business – I’d like to hear from you. Put them in the comments box below. Start the conversation and I’ll get back to you with answers or my own comments. If I get enough on one topic, I’ll address them in a future post or podcast.
I’ll be back with you again next Monday. In the meantime, I hope you have a safe and profitable week.
Joe
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The author is the founder, in 2001, of Worldwide Business Brokers and holds a certification from the International Business Brokers Association (IBBA) as a Certified Business Intermediary (CBI) of which there are fewer than 1,000 in the world. He can be reached at
jo*@Wo*******************.com