AGENCY RELATIONSHIPS WITH CLIENTS AND CUSTOMERS.
TRADITIONALLY, THE BUSINESS BROKER PROVIDES A CONVENTIONAL FULL-SERVICE, COMMISSION-BASED BROKERAGE RELATIONSHIP UNDER A SIGNED AGREEMENT WITH A SELLER OR "BUYER REPRESENTATION" AGREEMENT WITH A BUYER. AGENCY RELATIONSHIPS IN BUSINESS OWNERSHIP TRANSACTIONS INVOLVE THE REPRESENTATION BY A BUSINESS BROKER (ON BEHALF OF A BROKERAGE FIRM) OF THE SELLING PRINCIPAL, WHETHER THAT PERSON IS A BUYER OR A SELLER.
Broker services vary widely depending on the practice and skill set of the broker. The most common services provided by a broker to a client are:
• Assist client in establishing a MPSP Value—Most
Probable Selling Price Valuation; the techniques
used by individual brokers can vary greatly in
• Develop a comprehensive Information
Memorandum on the company, normally a 5-20
page document outlining the business for
• Conduct buyer searches;
• Expose and market the business to prospective
• Screen buyers for ability to complete a
• Coordinate negotiations and provide deal
• Provide overall deal management to guide the
client through the entire process;
• Help maintain confidentiality of the sale;
• Hourly consulting for a fee, based on the client's
• Perhaps one of the biggest services provided by
brokers is the ability to allow the business owners to
stay focused on running their business during the
sale process, which can take on average 9 months
to 24 months to complete.
Once a broker is used, a special escrow is established whereby the broker will hold the buyer’s deposit or funds (very similar to a Real Estate Closing in practice) to ensure that all parties involved will be paid. In the sale of a business, a deposit can vary from 10 to 50% of the agreed upon price.
The market served by business brokers generally involves the sale of businesses with transaction values up to $10,000,000. Larger privately held companies are classified in the middle market and will employ firms that specialize in mergers and acquisitions (M&A). We at America2030 Ukraine can perform full service brokerage in addition to full M&A services. The fees for M&A services vary substantially and are negotiated individually.
There are three forms of brokers compensation: hourly, retainer, and success fee (commission upon a closing). A broker may use any one, or combination of these when providing services. The most common form of compensation is a success fee commission where the payment of a commission to the brokerage is contingent upon finding a satisfactory buyer for the business for sale, the successful negotiation of a purchase contract between a satisfactory buyer and seller, or the settlement of the transaction and the exchange of money or other equity between buyer and seller. The retainer helps cover the upfront costs incurred by the broker to perform services and shows a commitment on the part of the client (seller or buyer) that they are serious.
A success fee commission ranges from 5% to 12% of the sale price and in some cases can even be as high as 15% due to various complexities. Commissions are determined between the client (seller or buyer) are normally paid at closing.
Usually, the smaller the transaction or the more complicated the transaction, the larger the commission. "Main Street" businesses, those with enterprise value between $1,000,000 and $10,000,000 can expect commissions to average between 8-12%, in additional to a non-refundable retainer of $10,000 to $50,000 depending on the exposure that the seller wants. Advertising is expensive and it’s necessary to advertise the business for sale and expose it. Businesses selling in the tens or hundreds of millions of dollars may require a retainer fee in the tens of thousands of dollars or even hundreds of thousands of dollars in order to value, audit, analyze and market the business properly. It is practically impossible to sell a business without promoting it. We at America 2030 are compensated only upon the successful sale of your business and we do not charge any advance fees.
Anyone can be just a business broker but a Certified Business Broker has the education, knowledge and experience that takes years to develop and perfect. A Certified Business Broker obtained extensive educational knowledge, belongs to accredited organizations and adheres to strict principals that any professional is expected to. We at America2030 Ukraine are Certified Business Brokers and you can expect results and professionalism from our firm at the highest level.
Upon signing a listing contract with the seller wishing to sell the business, the brokerage attempts to earn a commission by finding a buyer for the sellers` business for the highest possible price on the best terms for the seller. To help accomplish this goal of finding buyers, a business brokerage commonly does the following:
• Ensures confidentiality—Brokers have established
systems in place to protect the confidentiality of a
• Appraisals—Most business owners have no idea what
their business is worth. We at America2030 Ukraine
are Certified Business Brokers and are trained in
business valuation and can help business owners
understand the true value of all their business.
• Market knowledge—Brokers make their living
• Saves time and stress.
• Listing the business for sale to the public, often
employing any and all methods.
• Preparing necessary papers describing the business
for advertising, pamphlets, email campaigns, website,
• Advertising the business. Advertising is often the biggest
outside expense in listing a business and requires sellers
• Being a contact person available to answer any questions
about the business and to schedule showing appointments.
• Ensuring buyers are prescreened so that they are financially
qualified to buy the business; the more highly financially
qualified the buyer is, the more likely the closing will
• Negotiating price on behalf of the sellers. The seller's agent
acts as a fiduciary for the seller. By not being emotionally
tied to the transaction, business brokers are in a position to
more effectively negotiate on a seller's behalf. This may
involve preparing a standard offer to purchase contract by
filling in the blanks in the contract form.
• Negotiating facility lease assignment or transfer, negotiating
with creditors, assisting buyers in obtaining financing.
• In most cases, holding an earnest payment in escrow from
the buyer(s) until the closing. In many cases, the closing is
the meeting between the buyer and seller where the
business ownership is transferred and the businesses name
It is practically impossible to sell a business without advertising it and properly promoting it. Business brokers attract prospective buyers in a variety of ways, including listing limited details of available businesses on their websites and advertising in business newspapers, magazines, email campaigns and networking with other business brokers. Brokers also directly approach prospective buyers and sellers to gauge their interest.
A business brokerage usually earns its commission after the business broker and a seller enter into a listing contract and fulfill agreed-upon terms specified within that contract. Most business brokers require an exclusive listing agreement to sell your business. A business broker will not spend thousands of hours or even hundreds of hours without an exclusive right to sell the business. The typical period to sell a business is 6 to 18 months and will require an agreement for a minimum of 12 months. Depending on the size of the business and its complexity, it can take 30-90 days to evaluate a business, conduct an audit of the records and prepare the necessary marketing material in order to take it to market.
We have investors that may be interested in investing in to your business if you are not ready to sell.