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. Two Dollar Broker

    A floor broker who executes orders for other brokers who cannot ...
  2. Each Way

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

    An agent that mediates sales and exchanges between securities ...
  4. Aged Fail

    A contract between two broker-dealers that has not been settled ...
  5. Hit The Bid

    A buzzword used to describe an event where a broker agrees to ...
  6. Broker

    1. An individual or firm that charges a fee or commission for ...
Related Articles
  1. Investing

    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. Financial Advisor

    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. Trading

    Broker or Trader: Which Career is Right For You?

    A day in the life of a broker or trader is an exciting and varied one. Find out how to decide between these two financial professions.
  4. Trading

    Is Your Forex Broker A Scam?

    While the forex market is slowly becoming more regulated, there are many unscrupulous brokers who should not be in business.
  5. Investing

    Discount Broker

    A stockbroker who carries out buy and sell orders at a reduced commission compared to a full-service broker, but provides no investment advice.
  6. Trading

    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.
  7. Investing

    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.
  8. Trading

    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.
  9. Financial Advisor

    Evaluating Your Stock Broker

    Make sure you're getting the best service by staying informed and involved.
RELATED FAQS
  1. My broker just sold securities out of my account without my permission. Is this legal?

    Your broker's actions are not legal unless he or she sold the securities under certain conditions. Let's look at the two ... 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. 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 >>
Hot Definitions
  1. Operating Ratio

    A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. Calculated as:
  2. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  3. Pro Forma

    A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results ...
  4. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  5. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  6. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index ...
Trading Center