Business Broker Career Information

Business brokers buy and sell businesses. Like other brokers, they act as agents for buyers and sellers. This can be an extremely lucrative career for those with the business expertise and sales abilities required to succeed.

The Work Environment

A business brokerage operates using a portfolio of businesses and clients on their books. With both businesses for sale and intending purchasers, the business broker also acts as an advisory agent.

The business broker acts as an agent for buyers and sellers. This means that the broker has a duty of care called "due diligence" in this role. To buy or sell a business, the business broker must assess all aspects of a business sale or purchase in terms of viability and values.

Business brokerages often use a network for buying and selling, matching sellers with buyers.

The broker acting for the purchaser must evaluate:

  • Value of assets: This is a formal valuation of premises, stock, plant, vehicles, equipment, and other tangible assets.
  • Value of cash flow: The broker examines the books of the intended purchase, and forms a picture of the actual trade carried on.
  • Value of goodwill: Business reputation and commercial logos, trademarks, etc.)
  • Viability of the business: This may include assessing the business location, or any other trading factors affecting the business, like competition, profit margins, and sales projections.
  • Overheads: Running costs of any business affect the bottom line for profitability.
  • Risk management costs: Some businesses have specific risks, like construction, transport, and retail, where insurance coverage for accidents and staff compensation is required.
  • Any liabilities which the purchaser is required to assume: In most cases, purchasers of businesses do not take over liabilities, unless the owner is a corporate entity and the purchaser is taking over the company.

The purchaser, fully informed, can acquire the business or not, depending on this expert assessment and the business broker's advice.

For sellers, the business broker will also conduct an evaluation, to determine appropriate prices for the seller.

The broker, acting in the interests of the seller, must:

  • Ensure accurate disclosure of all relevant interests related to the sale affecting the purchaser: This is a legal requirement, as well as an ethical obligation. Sales of businesses are fully binding legal transactions conducted on the basis of the advice and guidance of business brokers.
  • Make every effort to secure a good, fair price for the seller: This is the "due diligence" requirement as it applies to sales.
  • Evaluate intending buyers: This may involve actual interviews with interested purchasers, discussing the sale and evaluating bids.

Wages: The top 25 percent of business brokers make in excess of $100,000 per year, in fees and commissions.

Hours: Dependent on the nature of the business, and case issues related to sale or purchase.

The Career Environment

Most business brokers are self employed, with previous business experience. Career advancement in this field is really development of their businesses and increasing volumes and values of trade. The US has relatively few business brokerages, only 3000 nationally, but they account for 250,000 sales each year. The expansion of business brokerage networking is increasing the market share of business brokers exponentially.