How to choose a business broker
A business broker or M&A advisor is an intermediary who markets a company for sale and manages the process, usually paid mostly through a success fee when the deal closes.
Key takeaways
- Brokers typically serve smaller companies; M&A advisors and investment banks serve larger ones.
- Most intermediaries are paid a success fee, sometimes with an upfront retainer.
- Ask about closed deals in your industry and size range, not general experience.
- Exclusive listing agreements lock you in for a period, so read the term and tail provisions.
Broker, advisor or investment bank
The titles overlap, but the split is usually by size. Business brokers focus on smaller, owner-operated companies. M&A advisory firms and investment banks work on larger companies with more complex processes. Pick the one whose typical client resembles you.
How intermediaries are paid
Most charge a success fee, a percentage of the transaction value paid at closing, because that aligns them with getting the deal done. Some also charge a retainer or monthly fee. Ask for every fee in writing, including what happens if the deal changes structure.
Questions to ask before you sign
Ask how many deals they closed in the last two years in your industry and size range, how they market a company without revealing it to competitors, who actually works on your deal, and what the exclusivity period and tail period are. Speak to a couple of past clients directly.
Frequently asked questions
Usually the seller pays the broker's fee out of the sale proceeds. Buyers sometimes pay their own advisors, and some buy-side search firms charge buyers directly.
The WhoBoughtWho directory lists business brokers, marketplaces and other acquisition resources by category, so you can compare options before you reach out.
Last reviewed . General information, not legal, tax or financial advice.