Brokers
Working with a broker.
What brokers do, how they charge, what a listing agreement commits you to, and how to run a process yourself if you choose to.
Expert answers
- How much does a business broker charge?Most business brokers are paid a commission calculated on the final sale price and paid on closing, sometimes alongside a retainer or a minimum fee. The exact structure is set out in the listing agreement, varies by brokerage, industry and deal size, and is negotiable before you sign.
- What is in a broker listing agreement?A broker listing agreement typically sets out the scope of what the broker will do, how and when the fee is earned, the length of the engagement, whether it is exclusive, confidentiality obligations, and how either side can end the relationship. Every clause is negotiable before signing.
- What is the difference between a business broker and an M&A advisor?Business brokers typically handle smaller, main-street transactions using a fairly standardized listing and marketing process, while M&A advisors typically work on larger or more complex deals involving deeper financial analysis, structured processes and institutional buyers. The line between them is not fixed, and some firms do both.
- Can I sell my business without a broker?Yes. There is no legal requirement to use a business broker to sell a business in Canada, and many owners of small or simple businesses sell directly, often to an employee, family member or known buyer. Going without a broker means taking on the marketing, screening and negotiation work yourself, usually with a lawyer and accountant involved.
- How do I choose a business broker?Choose a business broker by checking their track record with businesses similar in size and industry to yours, asking for references from past clients, understanding exactly how their fee is structured, and reviewing their marketing plan before you sign anything. A broker who avoids specifics on any of these is a warning sign.
- What is an exclusive listing agreement?An exclusive listing agreement means only that one broker is authorized to market and sell your business for the length of the agreement, even if you or another party brings in the eventual buyer. It is the most common arrangement business brokers use, and its exact scope and carve-outs are negotiable.
- What is a tail period in a broker agreement?A tail period is a clause that keeps a broker entitled to their fee for a defined stretch after the listing agreement ends, if you sell to a buyer the broker introduced or actively negotiated with during the engagement. It protects the broker from losing credit for work already done.
- Does a business broker represent the buyer or the seller?Most business brokers are engaged by, and represent, the seller, since their fee usually comes from the sale proceeds. Some brokerages also represent buyers directly under a separate agreement, and a few act for both sides on the same deal, which should always be disclosed clearly upfront.
- How do brokers market a business for sale?Brokers typically market a business using a blind listing that omits identifying details, a short teaser describing the opportunity in general terms, and outreach to their own network of qualified buyers, releasing more detail only once a buyer signs a non-disclosure agreement and shows they are serious.
- What should I ask a broker before signing with them?Before signing, ask a broker about their track record with businesses your size and industry, exactly how and when their fee is earned, how they will market and keep your sale confidential, and what the agreement says about term, exclusivity and how to end it if the relationship is not working.
- Can I list my business with more than one broker?It is possible, but most business brokers ask for an exclusive listing rather than an open one, and will decline or reduce their effort on a non-exclusive mandate. A true open listing, where several brokers compete to find a buyer, is uncommon and usually reserved for specific situations.
- How do I get out of a broker listing agreement?Start by reading the term and termination clause in your listing agreement, since most set out how much notice is required and whether either side needs a reason. Even after termination, a tail provision may keep a fee owed if you later sell to a buyer the broker already introduced.
- Do buyers pay broker fees?Usually not directly. The seller typically pays the broker who listed the business, out of the sale proceeds on closing. A buyer who separately engages their own buy-side advisor generally pays that advisor directly, under whatever terms the two of them agree, regardless of what the seller’s broker charges.
- What does a buy-side advisor do?A buy-side advisor works for a buyer, helping search for acquisition targets, screening opportunities against the buyer’s criteria, analyzing financials, and negotiating price and terms with the seller or their broker. They are engaged and typically paid directly by the buyer, under terms the two agree.
- How do I run a sale process myself?Running your own sale means preparing marketing materials, controlling who sees sensitive information and when, screening interested buyers for seriousness and financing capacity, and negotiating terms yourself, typically with a lawyer drafting or reviewing the purchase agreement and an accountant advising on structure and tax.
- Is Deavo really free?Yes. Deavo charges no fee to list a business, no fee to browse listings or contact a seller, and puts nothing behind a paywall in its current version. The platform is not paid a commission on any sale, because it never negotiates, represents either party, or closes the transaction.
- Can business brokers use Deavo?Yes. Business brokers can list the businesses they represent on Deavo the same way any seller can, at no cost, and doing so does not replace or change their existing listing agreement or commission with the seller. Deavo treats brokers as a supply source and a partner, not as a competitor.
- Who does what in a business sale — lawyer, accountant, broker?A broker runs the marketing and buyer process and negotiates deal terms, an accountant structures the sale for tax purposes and helps present the financials, and a lawyer drafts and negotiates the binding agreements and closes the transaction; the three roles overlap at points but are not interchangeable, and most sales involve all three.
Comparisons
- Business broker vs M&A advisorA business broker typically markets smaller, owner-operated businesses to a broad buyer pool and is paid mainly on a completed sale, while an M&A advisor typically runs a more customized process for larger or more complex transactions and is more often paid a retainer alongside a fee tied to closing.
- Online marketplace vs broker listingAn online marketplace gives a business visibility to a wide pool of self-directed buyers, usually without actively marketing, screening or negotiating on the seller’s behalf, while a broker listing adds a professional running that process — confidential marketing, buyer screening, negotiation — often by placing the same listing on one or more marketplaces as part of the work.
- Buy-side vs sell-side representationSell-side representation means an advisor or broker is engaged by, and owes their duty to, the seller — marketing the business and negotiating for the best terms on the seller’s behalf — while buy-side representation means the advisor is engaged by, and works for, the buyer, searching for and evaluating targets and negotiating in the buyer’s interest instead.
- Retainer vs success feeA retainer pays an advisor for their time and work regardless of whether a deal ever closes, while a success fee — sometimes called a commission — pays them only when a transaction actually completes, which is why many engagements blend the two rather than relying on either structure alone.
- Using a broker vs selling it yourselfA business broker markets the sale confidentially, pre-screens buyers and manages the process in exchange for a commission usually paid at closing, while selling it yourself keeps that fee but leaves you to find buyers, negotiate and run a confidential process on top of operating the business day to day.
- Exclusive vs open listingAn exclusive listing gives one broker the sole right to sell your business for a defined term, typically earning them commission even on a buyer you find yourself, while an open listing lets you work with several brokers, or none, at the same time and pay commission only to whichever one actually brings the buyer who closes.
Definitions
- Buy-side advisorA buy-side advisor is a professional engaged by a buyer to help find, evaluate, negotiate and close an acquisition. Unlike a listing broker, who is paid by and represents the seller, a buy-side advisor’s duty runs to the buyer throughout the search and the deal.
- Listing agreementA 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.
Ready to act on it?
Browse Canadian businesses for sale, or get a free value range for your own.