Listing agreement
A listing agreement is the contract engaging a business broker to market a business for sale. It sets the term, the fee, whether the engagement is exclusive, and — importantly — the circumstances in which the fee is payable even if the broker did not find the buyer.
Sellers sign listing agreements quickly, at the point they are keen to get moving, and then discover the terms months later when circumstances have changed. It is a commercial contract like any other and its terms are negotiable before signature, not after.
What to check before signing
- The term, and how it ends — automatic renewal clauses are common
- Whether it is exclusive, and whether a buyer the seller finds independently still triggers a fee
- How the fee is calculated, and on what base — including whether it applies to a vendor take-back or earn-out that may never be paid
- The tail period: how long after termination a fee is still owed on introduced buyers
- What marketing the broker actually commits to do
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Canada Revenue AgencyGovernmentSelling a business
- 02Treadstone LawLegal commentaryListing Agreement With a Business Broker in Ontario
- 03Treadstone LawLegal commentaryBusiness Broker Commission and Fees in Ontario
- 04Treadstone LawLegal commentaryBusiness Broker vs. M&A Advisor in Ontario
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.