How to choose a business broker (Canada)
A good Canadian business broker values and markets your business, qualifies buyers, manages negotiations and helps you close. This page covers what sell-side brokers actually do, what they charge, and the questions to ask before you sign. General guidance only.
What a sell-side broker does
On a sell-side engagement the broker represents you, the seller: valuation expertise, market analysis and marketing to attract buyers; managing inquiries and qualifying potential buyers; facilitating negotiations; helping structure offers; and assisting through closing. Source: BDC: business broker roles and fees
What they charge
As source guidance (BDC, describing typical structures, not a current rate card): an initial fee to launch the project, then a commission when the deal completes - "typically around 12% for transactions below CAD $1 million", and for a CAD $10 million transaction "often in the 4% to 6% range". Actual fees vary by broker, deal and date. Ask each broker for their exact structure in writing. Source: BDC: business broker roles and fees
Questions to ask before you sign
- How many businesses like mine have you sold, in my industry and province?
- Exactly what do I pay, when, and what does each fee cover (initial fee vs commission, minimums, marketing costs)?
- How will you market my business and how will you keep the sale confidential?
- How long is the engagement, and how do I exit it?
- Who handles my file day to day?
Good to know if you are buying instead
For buyers, being in a broker's database of potential acquirers usually costs nothing - the vendor pays the broker's fee if you buy - so registering with several brokers is reasonable. An active search, where the broker works directly for you, usually means a retainer plus a monthly fee. Source: BDC: business broker roles and fees