For most small business sales, the broker's main fee is a success fee: a percentage of the sale price, paid at closing. If the business doesn't sell, there's usually no success fee.
Common fee structures
- Percentage of the sale price. For smaller "Main Street" businesses, success fees are commonly around 10% of the price, though it varies by broker, deal size, and region.
- Minimum fee. Many brokers set a minimum, because a small deal takes nearly as much work as a larger one.
- Sliding scale. Larger deals often use a declining percentage as the price goes up, sometimes called a Lehman-style formula.
- Upfront or retainer fees. Some brokers charge for valuations, marketing, or a monthly retainer. Ask whether these are credited against the success fee at closing.
What the fee should cover
A full-service broker should handle valuation, the buyer package, confidential marketing, buyer screening, negotiation, and managing the deal through due diligence and closing. If a broker mainly posts your listing online and waits, the fee is buying much less.
Questions to ask before you sign
- What's the fee, and is there a minimum?
- Are there any upfront costs, and are they refundable or credited?
- How long is the agreement, and how can either side end it?
- If a buyer you introduced closes after the agreement ends, do you still owe a fee? For how long?
- How is the fee calculated on seller financing or earnouts?
- Who exactly will work on my deal?
A good broker should answer all of these plainly and put them in writing.
Want to know where your business stands? Take the free readiness assessment or request a free valuation.
This article is general information, not legal, tax, or financial advice.