Selling Businesses: Who’s Doing It and Why 80% Don’t Sell
10 March 2025: Selling Businesses
Do you know that 80% or more of the businesses that come to market don’t sell? It’s true.
As we’ve often posted, “selling businesses ain’t for sissies.“
There are more than a dozen reasons for this low success rate but until the reason(s) keeping a particular business from selling are corrected, that business will sit forever and the owner will be constantly complaining about: 1) the market being bad, 2) interest rates too high; 3) the political party in power; 4) there aren’t any buyers and maybe even the gravitational pull of the moon. They’ll also blame the broker.
A new study on our industry has been released by Marketdata LLC, a research publication, examining “…the nature and operations of business brokers – the professionals that act as intermediaries between the buyers and sellers of businesses, a fascinating but little-analyzed sector.” It’s findings are hardly a surprise to those of us that have been in the brokerage trenches for a while.
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To learn more, check out Resources in The Brokers Roundtable℠
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According to Research Director, John LaRosa: “The term ‘business broker’ is somewhat fuzzy. The sale of a business may be handled by a trained broker, a merger & acquisitions advisor, an attorney, accountant or a real estate agent. [But] Hiring a real estate agent to sell your business is like hiring a painter to do plumbing repairs.”
The report goes on to state, “[M]any “brokers” are, in fact, real estate agents who try to sell a business as an adjunct to their main activity – selling houses. Many of them don’t have the knowledge and skills needed to properly value a business, market it, handle negotiations, and sell it at the best price.
“Professional business brokers [especially] certified business intermediaries (CBI’s)] possess the expertise to assess financial statements, market conditions, and industry trends. They employ targeted marketing strategies to reach specific potential buyers, and have access to pre-screened, serious buyers. They vet buyers financially. Selling a business involves extensive paperwork and legal documentation. Brokers manage these administrative tasks, limiting access to confidential data.
“Real estate agents who act as business brokers may gain this knowledge … by taking courses from several training organizations. Some do this, but many do not. In addition, Realtors® rarely have knowledge of a variety of retail, manufacturing, healthcare, and consumer service sectors – the businesses they will be representing.“
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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.
Don’t Miss Out on the “Silver Tsunami”!
One of the most-read posts on this blog was titled “How Many Businesses Sell…Some Statistics” and was published in spring 2019 and written while I was in Orlando, Florida, attending the International Business Brokers Association’s annual conference. It told the story of a discussion group I and roughly 25 other professional business brokers, several of whom were fellow CBIs (Certified Business Intermediaries), convened to weigh in on why so many businesses don’t sell. Each of us named four or five causes of failure, many common to all of us. In the end, we had a total of roughly 15 different ones.
But the interesting thing about that confab was that everyone of us had at least two of the same three that were mostly responsible for this extraordinary lack of success. One of those three – and the one that EVERY broker present had on their list – was that the seller decided to hire a real estate agent.
Here are some of the report’s major findings:
- Market Size…Marketdata estimates that the U.S. business brokers industry was worth $1.8 billion in 2023, with revenues forecast to grow 8.5% annually to 2030.
- Demand… There are 33 million small businesses in the United States and over the next 10-15 years an estimated 12 million will be sold. (See this post on the s0-called “Silver Tsunami”.)
- Industry Structure… The business brokers market is fragmented… Brokers earn an average of $120,200 per year and the “average” brokerage firm has revenues of $396,000.
- Competition… Many people are attracted to this profession due to the low start-up cost, high 8-12% commissions, and no requirement for any license in many states. However, the work is complex and deals can take 6-9 months to complete.
Marketdata analysts also found that 30-40% of business brokers listed are actually real estate agents. But after we did the math, this statistic may result from the fact that 34% of all U.S. states – 17 – require brokers of businesses to be licensed as real estate agents.
We’ve written about how ludicrous this requirement is insofar as the talents needed to successfully sell houses are almost useless – and in many cases, less than useless; if fact, harmful – when selling businesses. (Though we admire the “painter/plumbing” comparison used in the report, we usually go with “hiring a real estate agent to sell your business is tantamount to hiring your dentist to replace your hip”.)
The Bottom Line
For years we’ve advising business owners to recognize that selling their business is most likely going to be the most significant financial transaction of their life and, as when getting a kidney replaced, hiring a professional that specializes in the task at hand is likely to significantly increase the odds of a successful outcome.
Understanding this is also a significant component of our training both for new brokers joining our network and real estate agents who want to add selling businesses to their menu of services. And for such Realtors, this is even more important given the impact of how their business has changed in the wake of the NAR’s massive settlement in 2024 of a U.S Justice Department lawsuit. It is so important that it’s part of regular discussions, training and coaching in The Brokers Roundtable℠.
“You have to perform at a consistently higher level than others. That’s the mark of a true professional.
– Joe Paterno
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