Can I use a broker to find buyers but negotiate the sale myself?
You can if the broker agrees and the listing agreement says so. Put in writing who speaks to buyers, who receives offers and when a fee is earned. Without those terms, the agreement may still treat the broker as owed a fee on a buyer they introduced.
BDC says sellers can find buyers through a business broker for smaller businesses, and describes brokers as intermediaries with a network of qualified buyers they can discreetly approach on the seller’s behalf. Introductions are therefore one part of a broker’s role. Whether you can keep negotiation for yourself is a question of what the broker will accept and what your agreement says, so settle both before the first buyer appears. If you would rather run the whole process yourself, see how to run a sale process yourself.
What the agreement has to say
Ask for a split written into the agreement, not a verbal understanding. Check who may speak to buyers, who receives offers, whether you must pass every enquiry to the broker, and exactly when the fee is earned. A clause that pays the broker on any sale to a buyer they introduced may apply even where you negotiated every term. Read that wording with your lawyer, and ask the broker to confirm in writing how a self-negotiated sale is treated.
Where negotiation happens
BDC describes price negotiation as taking place in stages. After initial marketing and buyer interest, a serious buyer submits a letter of intent, and talks at that stage cover the headline price range and general deal structure. After an accepted letter of intent, the buyer and its legal counsel, experts and accountant examine the seller’s finances, legal position, operations and staff. BDC adds that the seller will have M&A specialists, a lawyer, an accounting firm and sometimes a tax specialist to answer questions and give advice. If you keep negotiation for yourself, these are the stages you would handle, so have those advisors ready.
Binding terms in a letter of intent
BDC notes that a letter of intent can create binding obligations, particularly on confidentiality and exclusivity, where it says so. If you are negotiating directly, have your lawyer read any letter of intent before you sign, including how long the exclusivity period runs.
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaIndustryHow to sell your business
- 02Business Development Bank of CanadaGovernmentHow to minimize negotiations when selling your business
- 03Business Development Bank of CanadaGovernmentLetter of intent and confidentiality agreement for a business acquisition: What clauses should be included?
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