Business owners have one opportunity to sell their business.  The International Business Brokers Association (IBBA) reports a competent business broker adds as much as 20% to the selling price.  Therefore, it is important to interview business brokers before hiring one. 

In this article Eric Gall, founder and licensed broker of Edison Business Advisors, recommends nine questions to ask when hiring a business broker and provides an explanation of why each question is important.  

 1.  What are the business broker’s qualifications, experience, and certifications?

Having a thorough understanding of analyzing and recasting financial statements; valuing and pricing businesses; as well as marketing and advertising is crucial when selling a business.  These qualifications are so important they will be discussed in more depth later in this article.  

Transaction experience is also important. Selling a business is a complex process that requires experience and creative skills to keep a deal together when obstacles arise.  In most cases, years of experience are not as important as the number of transactions completed. 

There are certifications programs for brokers, for example, the IBBA offers the Certified Business Intermediary (CBI) designation.  The CBI requires completing the stringent education and performance requirements as well as the high ethical standards of the IBBA for main street business transactions generally below $1M in EBITDA.  To maintain active status, the IBBA requires membership, conference participation, and education.

M&A Source offers the Merger & Acquisition Master Intermediary and Certified Merger & Acquisition Professional (M&AMI and CM&AP) designations.  The M&AMI and CM&AP require achieving the in-depth knowledge of the specialized approach required to successfully prepare and execute lower-middle-market transactions generally above $1M in EBITDA.  The M&AMI also requires successfully completing a specified number of lower-middle-market transactions.  To maintain active status for a M&AMI, M&A Source requires membership and conference participation.

A certified broker has extensive training in analyzing and recasting financial statements; valuing and pricing businesses; as well as marketing and advertising.  In addition, they are knowledgeable about the ethical and legal aspects of business brokerage. If a broker is not certified, it is a clear indication they have not made the investment in time and money to ensure proper care in preparing and selling businesses.  

2.  What associations does the business broker belong to?

International associations, such as the IBBA and M&A Source, and State associations, such as the Business Brokers of Florida (BBF), provide not only excellent marketing and networking benefits, but they also provide training to stay on top of the latest processes, methods, and tools for selling businesses.  Members of associations are better trained and equipped to sell businesses.   

3.  How does the business broker value and price a business?

Having a thorough understanding of analyzing and recasting financial statements is crucial when valuing and pricing a business. Trust can be broken, and deals can fall apart if the initial recast by the broker is inaccurate.  

In general, there are three approaches to valuing a business: Market Approach, Income Approach, and Asset Value Approach.  Together these approaches have eight methods for valuing a business: Direct Market Data Method, Guideline Public Company Method, Merger & Acquisition Method, Capitalization of Benefits Method, Discounted Future Benefits Method, Multiple of Discretionary Earnings Method, Net Asset Accumulation Method, and Excess Earnings Method.

A combination of any number of these eight methods is used, depending upon the business’s particular situation, to estimate value. The Most Probable Selling Price (MPSP) is calculated by weighing each of the methods used.  Adjustments are then made to the MPSP, based on value factors that can affect the value of the business, to determine the adjusted MPSP.  There are valuation tools, specifically sold databases and valuation software, to assist in determining the adjusted MPSP. 

Determining the price of a business is dependent upon the supply and demand of the business type, amount and type of financing offered, and in some cases interest from strategic or synergistic buyers.  A competent broker will not simply accept a seller’s desired price or use hearsay to determine the price.  A thorough valuation and pricing analysis is required. This will greatly increase the chance of selling a business in a timely manner and at a fair price.

4.  Does the business broker sell businesses full-time?

Selling a business is a complex and challenging process requiring 100% dedication to successfully complete a transaction.  A broker whose time is split between selling houses, commercial properties, or other side-jobs will have less time to commit to learning the profession and to their clients.  Deals can fall apart if they lack knowledge or are not available when needed to keep a deal together. 

Selling homes and commercial properties is very different from selling businesses. Many residential and commercial realtors trying to also sell businesses often do not understand or respect confidentiality nor do they understand financial recasting, valuation, and pricing processes at a depth necessary to successfully sell businesses and maximize their return.

5.  What are the business broker’s marketing tools?

Selling a business is not easy, especially given confidentiality is a big concern.  Unlike real estate, a broker cannot put a for sale sign in front of a business.  Therefore, selecting the appropriate marketing tool is important.

For main street businesses, there are many public listing websites to post a business for sale, such as,, and 

For lower-middle-market businesses generating more than $2M in EBITDA, public listing websites are generally not used. Instead, they are posted on buyer subscription listing websites, such as and  Private equity groups, family offices, etc. pay to find businesses for sale.  Typically, their expectation on how a business should be prepared for sale is much higher than main street business buyers’.  In addition, there are instances when it is not appropriate to put a price on a lower-middle-market business as it limits the upside a strategic buyer may be willing to pay.  Therefore, it is crucial to hire a broker who is certified and/or experienced in transacting lower-middle-market businesses.

Marketing to buyers a broker has already qualified and worked with is very effective.  Most established brokers have a large database of qualified buyers they email frequently to share the newest businesses for sale.  Having this large database can help quicken the process of finding the right buyer and completing a transaction.  

Social media, especially LinkedIn, is an excellent tool to promote businesses and to conduct targeted marketing campaigns to potential buyers in related industries who may be interested in buying the business to expand their product/service offerings or geographical footprint.

A crucial marketing tool is a well-written, comprehensive Confidential Business Review (CBR). The CBR answers the basic questions a buyer would ask to determine if a business is a good fit.  Sadly, many brokers are lazy and do not take the time to ask and document these basic questions. Laziness wastes time for buyers and sellers.  Most buyers will simply skip over a business not properly prepared for sale. Others will want a meeting with the seller, only to ask very basic questions that if answered in the CBR, would have led the buyer to realize the business is not a fit.  When interviewing a broker, it is very helpful to ask to see examples of their CBRs.

6.  What is the business broker’s process for ensuring confidentiality and qualifying buyers before sharing confidential information?

Keeping the sale of a business confidential is very important. It can be detrimental if customers, employees, competitors, or suppliers become aware of the sale. Every buyer should be required to sign a non-disclosure agreement (NDA). For businesses priced over $100K, a financial statement and resume should also be required.  This will avoid wasting time on a buyer who does not financially qualify to purchase nor has the right skill set to operate the business.  

7.  What is the business broker’s recent and lifetime transaction record?

The number, range, and average transaction size of completed transactions in the past year and lifetime of a broker can help determine if they are a good fit.  For example, if they have only completed very small transactions and a business is worth over $1M, chances are they do not have the knowledge to complete a complex transaction nor a list of qualified buyers to share the business with.  This can help quicken the process of finding the right buyer and completing a transaction.

8.  Is the business broker willing to co-broke?

Co-brokering is helpful as it maximizes a business’s exposure to buyers. A few associations, such as BBF, require members to co-broke with other members by sharing their businesses for sale in the BBF MLS system. A broker’s focus should be on selling a business to the first qualified buyer and not on earning 100% of the commission.

9.  What are the business broker’s fees?

Expect to pay a success fee of 10% at the time of sale for a business transacting under $1M, $10,000 for a business transacting under $100K, and Double-Lehman for transactions over $1M.  Some brokers want to charge 12% to 15%.  If a business is struggling or the broker believes the sale may be difficult, 12% to 15% may be fair.

Some brokers charge an up-front fee to list a business for sale, perform specific marketing programs, or complete a valuation.  Up-front fees are frequently deducted from the commission upon the sale of the business.  A broker asking for a significant sum of money up front to list a business for sale will likely be less motivated to sell the business than a broker who earns their commission upon successful sale of the business.


Business owners have one opportunity to sell their business. Through these nine questions, Eric Gall demonstrated the importance of working with an experienced and credentialed business broker. Knowing the right questions to ask when hiring a business broker can make a big difference in a business selling in a timely manner and at the best possible price and terms.
To learn more about Eric Gall, founder and licensed broker of Edison Business Advisors, click here.