business for sale

Selling Your Business? Engage A Business Broker


Business Brokers Will Guide A Sale From Valuation To Closing

By Judith Bachman

The coronavirus pause that shut down most New York businesses this spring inadvertently became an inflection point for business owners to take a contemplative time-out. Dealing with unprecedented down time and the real-life scenario of a pandemic forced many business owners to think about exit plans.

For some, the pandemic even accelerated that desire.

judith bachmanSome business owners have built-in successors – next generation family members or internal employee candidates. But if you need to go out to the general market to find a buyer, it is strongly advisable to hire a business broker.

A business broker is an important ally for guiding an entrepreneur from valuation to marketing to ultimately closing on the transaction. A competent broker will do his best to negotiate for the highest price and best terms for the business, while keeping the other side at the table.

A selling broker is paid out of the proceeds of the sale – – often five percent or more of the sale price of the business.

Given their central role in any sale, reviewing and negotiating the business broker’s listing agreement is a critical, but is often an overlooked step in exit planning.

The listing agreement delineates the broker’s role and compensation.  Here are the points that are typically covered in a business brokerage listing:

  1. Sale terms – – what are the minimum sale terms that the broker must obtain?
  2. Percentage commission – – what is the percentage amount of the sale proceeds that the broker will be paid?
  3. Minimum commission – – regardless of the percentage, is there a minimum dollar amount the broker will be paid?
  4. Basis of commission – – on what basis is the commission to be calculated, e.g., all of the sale price regardless of the period of time over which the price will be paid?
  5. Timing of commission – – at what time is the commission due, e.g., all at closing?
  6. Exclusions – – are there any people or entities, e.g., employees, customers, competitors, that, if they purchase the business, no commission will be due?
  7. Obligations of the broker – – what exactly is the broker obligated to do, e.g., advertise in specific publications for a specific amount of time?
  8. Term – – how long does the agreement last? Can it be terminated under certain circumstances?
  9. Confidentiality – – what are the protections to avoid disclosure of confidential business information?
  10. Dispute – – what is the procedure if there is a dispute with the broker?

While this list is not exhaustive, it can be used as a starting point to carefully examine and negotiate the terms of a listing agreement with a business broker. Doing so will be a key ingredient in a successful sale of a business.

Judith Bachman is the founder and principal of The Bachman Law Firm PLLC in New City. 845-639-3210,