Business Broker

DEFINITION of 'Business Broker'

A professional who specializes in the purchase and sale of companies. Business brokers help individuals and businesses who want to buy or sell a business. A business broker might specialize in selling companies in certain industries, such as restaurants, retail, manufacturing or hospitality. A business broker might also specialize in selling businesses of a certain size (e.g., businesses with annual sales of at least $10 billion) or with certain unique characteristics (e.g., tightly environmentally regulated businesses).

BREAKING DOWN 'Business Broker'

Transferring ownership of a business is a complex process involving determining a fair price for the company, making sure the business’s finances and financial records are in order, negotiating a price, going through escrow and closing the sale. Business brokers not only manage these steps, but also ensure confidentiality by requiring interested buyers to agree not to disclose the details of the potential business sale. Business brokers can also help with licensing and permitting requirements and can weed out unqualified buyers.

A good way to gauge a business broker’s success is by looking at the percentage of businesses they’ve sold out of all the businesses they’ve tried to sell. Aside from the desire to get professional help with a complicated transaction, companies hire business brokers to increase the likelihood that the business will sell at all. Business brokers have relationships with people seeking to buy businesses as well as those seeking to sell. They also know how to market a business for sale. Business brokers are paid through commissions based on a percentage, typically 10% to 15%, of the sale price they secure for the company.

Those wishing to buy or sell a business can locate business brokers through attorneys, accountants, professional associations and the International Business Brokers Association. Business brokers may work independently or as part of a larger business brokerage firm. Business brokers have specialized knowledge of the tax and legal implications of selling a business. Business brokers also add value by allowing the business’s owners to continue to focus on running the business while the broker focuses on selling it. 

RELATED TERMS
  1. Give Up

    A procedure in securities or commodities trading where the executing ...
  2. Carrying Broker

    A commodities or securities broker who provides back office functions ...
  3. Forex Broker

    Firms that provide currency traders with access to a trading ...
  4. Each Way

    A slang phrase used when a broker earns commissions from both ...
  5. Discount Broker

    A stockbroker who carries out buy and sell orders at a reduced ...
  6. Deep Discount Broker

    An agent that mediates sales and exchanges between securities ...
Related Articles
  1. Investing Basics

    How To Choose The Right Online Trading Broker

    The online broker market is becoming more competitive, but differences exist in services that can help traders choose the broker that’s right for them.
  2. Brokers

    Key Differences Between M&A Advisors And Business Brokers

    For a buy, sale or partnership for one's business, one needs brokers and advisors to proceed ahead. Here are the key differences between business brokers and M&A advisors.
  3. Investing Basics

    Picking Your First Broker

    If you're a rookie investor, your first big investment decision should be an informed one.
  4. Trading Strategies

    The Best Low-Cost, Web-Based Trading Brokers

    With this table, investors can differentiate between top low-cost, web-based trading brokers by price, capabilities, and offerings.
  5. Brokers

    Is Your Broker Acting In Your Best Interest?

    Learn the clues you'll need to determine whether you've chosen a reputable professional.
  6. Professionals

    What Does a Broker Do?

    In the investment world, broker is a term used to refer to an individual or entity that helps facilitate trading in financial securities.
  7. Brokers

    Evaluating Your Stock Broker

    Make sure you're getting the best service by staying informed and involved.
  8. Entrepreneurship

    Ready to Retire? Here's How to Sell and Close Your Small Business

    Learn the essential steps to prepare to sell your business with the best possible outcome, a secure retirement for you and your family.
  9. Forex

    How Forex Brokers Make Money

    Forex brokers set their prices based on commission, spread, or a combination of both. Traders have to be cautious in the thinly regulated forex market.
  10. Forex Education

    Price Shading In The Forex Markets

    This practice puts brokers ahead of their clients, but it doesn't have to be a negative for traders.
RELATED FAQS
  1. I'm new to this. Can I sell or buy stock by myself?

    In order to buy stocks, you need the assistance of a stock broker since you cannot just phone up a company and ask to buy ... Read Answer >>
  2. There are so many stockbrokers out there. How do I go about choosing the best one ...

    If you decide that you have the knowledge and experience to take on stock investing, or if you feel you would like to give ... Read Answer >>
  3. Does a broker always have to buy a stock if I want to sell it?

    There are certain times when a broker must purchase the stock that you are selling. For example, if the broker is a market ... Read Answer >>
  4. What is the difference between a broker and a market maker?

    A broker is an intermediary who has a license to buy and sell securities on a client's behalf. Stockbrokers coordinate contracts ... Read Answer >>
  5. What does "in street name" mean, and why are securities held this way?

    In almost every instance when you buy or sell securities with a broker, your name is not actually on the stock or bond certificate. ... Read Answer >>
  6. What is the point of developing a business model?

    Learn some of the benefits of developing a business model and how business models are used. Consider an example of business ... Read Answer >>
Hot Definitions
  1. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  2. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  3. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  5. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  6. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
Trading Center