Questions to Ask a Business Broker Before Hiring One
Questions to ask a business broker before you hire one to sell your company. The first five are the ones to ask if the meeting is short. The rest are grouped by the broker's experience, fees and listing terms, price and timing, how buyers are found and screened, and the deal itself. Each has a note on what a solid answer sounds like, what a vague one usually means, or what to take to your own attorney or accountant.
The questions
Each question, and why to ask it
Start here
How many businesses have you sold in the past two years, and how many were in my industry?
Why ask it
Closed deals, not years in business, are the real measure of a broker. A broker who has sold three HVAC companies knows the buyer pool and the add-backs; one who has only sold restaurants will be learning on your listing.
What is your commission rate, and do you have a minimum fee?
Why ask it
Most brokers charge a percentage of the sale price with a minimum fee underneath, and in the United States a small-business broker will commonly quote around ten percent. On a small sale the minimum, not the percentage, is the figure you will actually pay. Rates differ by country, market and deal size, so get each quote in writing and compare them side by side.
What do you think my business is worth, and what method did you use to get there?
Why ask it
You want a specific multiple applied to a specific earnings figure, ideally backed by comparable sales data from a transaction database rather than a rule of thumb. A number with no visible arithmetic behind it is a sales pitch, not a valuation.
How will you market the business without my employees, customers or competitors finding out?
Why ask it
A leak can cost you staff and customers before you ever reach closing. Listen for blind profiles that describe the business without naming it, NDAs before any detail is released, and a rule against contacting your customers.
How long is the listing agreement, and what does it take to terminate it early?
Why ask it
Terms vary and a year is common, but some agreements renew automatically or allow no exit at all. Look for a written right to cancel after a set period with no serious buyer. A spoken promise that you can walk away is hard to rely on once you have signed.
Experience
How long have you been brokering business sales, and what did you do before that?
Why ask it
Brokering is often a second career, and the earlier job shows where someone will be strongest: a former owner on what selling feels like, a former banker on what a lender will accept. A newcomer is not ruled out, but find out who at the firm reviews their deals.
What size of deal do you usually handle, and where would mine sit in that range?
Why ask it
Be wary of being the smallest listing on the books, because the larger ones will get the hours. Being the largest is its own risk: the broker's buyer contacts and their experience with lenders and attorneys may stop below your price.
Are you a full time broker, and how many listings are you personally handling right now?
Why ask it
Some brokers sell part time or carry twenty listings at once, which means your business gets attention only when a buyer happens to call. There is no magic number, so ask how many hours a week each listing gets and who covers when they are away.
Who will actually handle my listing day to day, you or an associate?
Why ask it
Firms often send a senior broker to win the listing and hand the work to a junior. Ask to meet whoever will field buyer calls and manage diligence, because that person's judgment will shape every conversation about your company.
What licenses and credentials do you hold, and which broker associations do you belong to?
Why ask it
In the United States, designations such as CBI or M&AMI come with coursework, experience requirements and an ethics code, and some states require a real estate license to broker a business sale at all. Look up what applies where you are before the meeting. A license or a membership also means there is somebody to complain to if things go wrong.
Of the businesses you listed in the last 24 months, what share actually sold, and how long did they take?
Why ask it
Plenty of listed small businesses never sell, so a broker claiming a near perfect rate is either very selective about listings or rounding generously. Time on market also tells you how long you will be running the business while distracted.
Do you turn listings down, and what was the last one you said no to?
Why ask it
Someone who accepts every owner who calls is collecting listings and hoping a few close. The reasons for a refusal, such as an unrealistic price, books nobody could verify or an owner who was not ready, show the standard your own business is being held to.
Can I speak with your last three sellers, including one whose deal did not close?
Why ask it
Curated references only show the wins. The seller whose deal fell apart will tell you how the broker communicated under pressure and whether they were honest about price, which is exactly what you need to know before you sign.
Do you carry errors and omissions insurance, and has a client ever filed a complaint against you?
Why ask it
Errors and omissions cover is there for a mistake that costs you or the buyer money, and a broker without it leaves that risk with you. The complaint half is awkward to raise, which is why few sellers do, but where brokers are licensed you can often check the regulator's public record. A calm, specific account of an old dispute is more reassuring than a quick no.
Fees and terms
Do you charge any upfront retainer, valuation or marketing fee, and is it credited against commission?
Why ask it
Retainers are normal at lower middle market M&A firms, where months of preparation come before any buyer sees the business. They are a worry when a broker could make a living from signing sellers whether or not anything closes. A fee that comes off the commission at closing keeps their pay tied to yours.
What exactly is the commission calculated on: inventory, real estate, a seller note, an earnout?
Why ask it
Listing agreements define the price the percentage applies to, and the definition can take in things you would not think of as sale proceeds, such as debt the buyer assumes or a consulting contract. Find out whether the fee on deferred money is paid as you receive it, so you are not paying commission at closing on an earnout that may never arrive.
Besides your fee, what will selling cost me?
Why ask it
Expect an attorney and an accountant at least, and depending on the deal a share of escrow or closing costs, an appraisal, or a landlord's transfer fee. Anyone who has closed sales at your size can rough out each line, and with that you can estimate what you would keep, which is a different figure from what the business sells for.
Is this an exclusive agreement, and would I owe your fee if I found the buyer myself?
Why ask it
Most listing agreements are exclusive, and many pay the broker whoever produces the buyer, you included. That can be fair, since their marketing may be what stirred the interest, but know which kind you are signing. If a competitor or a key employee is already talking to you, get those names carved out in writing first.
Will you work with another broker who brings a buyer, and how would the fee be split?
Why ask it
A broker who will not share a commission is shrinking your buyer pool to protect their own cut. Find out how many of their recent sales involved a second broker, and confirm that the split comes out of their fee and is not added to yours.
Would I owe you anything if I turn down an offer or take the business off the market?
Why ask it
Some listing agreements treat the fee as earned once a buyer offers the listed price and terms, whether or not you accept, and some charge for withdrawing. Have them point to the clause, then have your own attorney read it before you sign.
Does the agreement have a tail period, and which buyers does it cover?
Why ask it
A tail clause pays the broker if you sell, within a set time after the listing ends, to someone they introduced. That is reasonable when it is limited to named buyers, so ask for the list in writing on the day the agreement expires. A tail that covers anyone who ever saw the listing can leave you owing a fee on a sale they had no part in.
Do you ever represent the buyer and the seller in the same transaction, and how do you handle that?
Why ask it
Acting for both sides is allowed in many places, but it puts the broker between your price and the buyer's. Hear how they disclose it, whether their fee changes, and whether they would simply decline it while you are their client.
If the business has not sold when the agreement runs out, what do you do then?
Why ask it
You are listening for a plan made in advance: a date when they would come to you about the price, what they would change in the marketing, and whether they would ever advise you to withdraw. Brokers who have never thought about it tend to let stale listings sit.
Price and timing
Will you put your valuation and the reasoning behind it in writing before I sign anything?
Why ask it
Willingness to commit on paper shows whether the number was an assessment or a way to win the listing. If the written version arrives lower than the verbal one, you have learned something important at no cost.
How would you adjust my financials to show what an owner really earns, and which add-backs would you defend to a buyer's lender?
Why ask it
For a small business the price is usually built on seller's discretionary earnings: profit with the owner's pay, perks and one-off costs added back. Each add-back needs paperwork behind it. One that a lender throws out opens a gap in the valuation, and the gap comes back during diligence.
Is inventory included in the price, and how much cash and receivables stay with the business?
Why ask it
Two listings at the same asking price can pay their owners very differently, depending on whether stock is added on top and who keeps the money customers still owe. Settle the definition before a figure is published, because buyers anchor on the first number they see.
Would you publish an asking price or take the business to market without one?
Why ask it
Smaller listings almost always carry a price, while larger companies are often shown without one so that buyers name their own number. Either can be right. What matters is that the broker can explain the choice for your business and say how far above their valuation they would open.
How close do your final sale prices come to the asking prices you set?
Why ask it
Brokers sometimes win listings by promising a high price, then spend six months talking the seller down. A broker who closes near asking has been pricing honestly, which is worth more to you than an optimistic opening number.
What happens to the price if my sales dip while the business is on the market?
Why ask it
Buyers and their lenders keep asking for fresh monthly figures right up to closing, and a soft quarter is a common reason for an agreed price to be reopened. Ask how they have handled that before. The practical lesson is that you cannot coast once the listing goes live.
What killed your last few deals, and what would you fix in my business before we go to market?
Why ask it
Deals that died are a broker's best education, and the causes repeat: one customer who is half the revenue, books that do not match the tax returns, a lease that cannot be assigned, an owner nobody can replace. Listen for which of those they see in your business and what they would have you repair first.
Would I do better selling now or after another year of preparation?
Why ask it
A broker paid only at closing has every reason to say list today. One who tells you to wait, and names what a year of cleaner books or a trained manager would add, is advising against their own short-term interest, which is a good sign.
What will you need from me before we go to market, and how long will that take me?
Why ask it
Preparation usually means three years of accounts, normalized earnings, contracts, leases and staff details, and it lands on you rather than the broker. Knowing the workload up front prevents a listing that goes live before it is ready.
What is a realistic timeline from signing with you to money in my account?
Why ask it
Have them break it into stages: preparation, time on the market, and the stretch from accepted offer to closing. Each has its own typical delay, whether that is your paperwork, a slow lender or a license transfer, and a single cheerful total means nobody has thought about yours.
Finding buyers
What kind of buyer is most likely to want my business: an individual, a competitor or an investor?
Why ask it
The answer steers the whole marketing plan. An individual buying themselves a job is found on listing sites and usually borrows, while a competitor or an investment group is approached directly and looks hardest at what the business earns without you. If the broker cannot say which is likeliest, the plan that follows is guesswork.
Who is already on your buyer list for something like mine, and are any of them active right now?
Why ask it
A broker with a real list can tell you, without naming names, how many buyers on it are looking at your size and sector today. Vagueness here usually means your business will simply be advertised and the buyer pool built from scratch.
Where will you advertise my business, and who will you contact directly?
Why ask it
A listing on a marketplace such as BizBuySell brings inbound inquiries, and for a small local business that may be enough. A larger or more specialized company usually needs direct approaches as well: to trade buyers, search funds and private equity groups adding to a company they already own. Ask roughly how many of each they expect to reach.
Can I see the listing and the information package you prepared for a recent sale?
Why ask it
A buyer judges your company by this document long before they meet you. Read a redacted one for whether it explains how the business makes money and answers the obvious objections, or just lists equipment and adjectives.
How do you screen buyers before you release my financials?
Why ask it
Business-for-sale listings attract tire kickers and competitors doing reconnaissance. A serious broker requires a signed NDA, a buyer profile, proof of liquid funds and often a lender prequalification before the tax returns move.
At what stage does a buyer learn my company's name, and what stays back until there is a signed offer?
Why ask it
Customer names, pricing, supplier terms and staff pay are what a rival would most like to read, and a signed NDA does little once they have read them. Good brokers release information in stages with your approval at each one. Make sure the final word on any buyer who is also a competitor is yours.
How do you run buyer meetings and site visits without my staff noticing?
Why ask it
The usual answers are meetings off the premises, walk-throughs after closing time and a plain cover story for anyone who asks. Find out whether the broker attends every meeting, since an unchaperoned buyer chatting to your manager is how word gets out.
How often will I hear from you, and what will the update include?
Why ask it
Agree a rhythm now, whether weekly or every two weeks, with numbers in it: inquiries, NDAs signed, packages sent, meetings held. The most valuable line is why buyers passed, because that is the only way to tell a price problem from a marketing problem.
The deal
How will a buyer most likely pay for this, and have you closed deals with bank or SBA financing at my size?
Why ask it
In the United States many small acquisitions are funded with an SBA loan, and the loan rules shape the structure, the seller note and the timeline. A broker who has not worked with those lenders tends to meet the constraints late, when they are expensive. Elsewhere, ask which lenders finance deals like yours and what they insist on.
How much of the price should I expect in cash at closing, and how much as a seller note or an earnout?
Why ask it
The headline price is rarely all cash on the day. A seller note means you lend the buyer part of the price, and an earnout pays you only if the business hits targets after you have handed it over. Hear a realistic split now, so you know how much deferred money you could live with before an offer forces the question.
What do you do when more than one buyer is interested?
Why ask it
Competition is the main thing that moves price and terms in your favor, so ask how they create it: a deadline for offers, or simply keeping a second buyer warm. Listen as well for how they compare bids, since more cash at closing can beat a higher headline number.
Who negotiates: you, me, or my lawyer, and who has the final say?
Why ask it
Brokers vary from making introductions to running the whole negotiation, and the fee often does not reflect which. Be clear that no offer is accepted or rejected without you, in writing.
Is this more likely to be an asset sale or a stock sale, and when should my accountant get involved?
Why ask it
The structure, and the way the price is allocated, can change what you keep after tax, and the buyer's preference is usually the opposite of yours. A broker is not a tax adviser. The good ones say so and want your accountant in the room before any offer is signed, not after.
Who drafts the purchase agreement: you, the buyer's attorney or mine?
Why ask it
Practice varies with deal size and with local rules on what a broker may prepare. Some fill in a standard form, and larger sales are attorney-drafted from the start. Whichever it is, your own attorney should read it before you sign, and anyone who calls that a waste of money is protecting the closing, not you.
Which attorneys, accountants and lenders do you usually work with, and am I free to use my own?
Why ask it
A ready list suggests they close deals often enough to know who is good. Ask whether they receive anything for the referral, and be honest with yourself about your own advisers: a family attorney handling a first business sale can slow things as badly as a poor broker.
What is your role once a letter of intent is signed?
Why ask it
Many signed offers never reach closing, and some brokers treat the offer as the finish line. The useful ones keep a checklist of what the buyer has asked for, chase the lender and the attorneys, and hold a standing call until the money moves.
When would you approach my landlord about transferring the lease?
Why ask it
Landlord consent is a classic late surprise: asked too early it leaks the sale, and asked too late it holds up closing while new terms or a fee are negotiated. An experienced broker reads the assignment clause before listing and has a view on the timing.
When do my employees find out, and how have you seen that handled well?
Why ask it
Many sellers wait until closing or just before, but a buyer will often insist on meeting a key manager first. Ask what has worked for their past clients, including stay bonuses and who delivers the news, because a badly timed announcement can cost you the people the buyer is paying for.
What non-compete and training period should I expect a buyer to ask for?
Why ask it
Nearly every buyer wants both, and how long and how wide they run is negotiated along with the price. How far a non-compete can be enforced depends on where you live, so treat the broker's answer as a picture of what is customary and take the wording to your attorney.
How to Interview a Business Broker
Practical guidance for the conversation itself
Run a Real Interview, Not a Listing Presentation
Interview at least three brokers
Talk to a local Main Street broker, an industry specialist and a lower middle market M&A firm if your earnings support it. The spread in their valuations and marketing plans will teach you more about your own business than any single meeting.
Spread the list over two meetings
The first five questions fit a short first call. Experience belongs to the first proper meeting, along with Price and timing. Fees and terms are easiest with the draft agreement in front of you, and Finding buyers and The deal suit a second conversation with the one or two brokers still in the running.
Ask to see work product, not just a pitch deck
Request a redacted confidential information memorandum from a comparable listing they sold. If the marketing package is two pages of generic copy, that is what your business will get.
Check the valuation math yourself
Write down the earnings figure and the multiple, then ask which comparable sales support that multiple. Then ask what number a lender's appraiser would likely land on, since a buyer who borrows will usually need a valuation that supports the price.
Read the listing agreement before you get excited
The term, the tail, the minimum fee, the exclusions and the cancellation rights are all open to negotiation while you are deciding, and much harder to change once you have signed. Take a copy away and have your attorney read it, not just your broker explain it.
If you are the buyer, not the seller
This list is written for an owner choosing a broker. The broker named on a listing usually works for the seller and is paid out of the sale, so a buyer's first question is who they represent. After that come why the owner is selling and what the earnings figure is built from.
Red Flags in the Answers
- The valuation is dramatically higher than the other brokers gave you and comes with no comparable sales behind it
- A large upfront fee that is not credited against commission at closing
- A listing agreement that renews automatically or gives you no written way out
- A tail period with no end date or no list of the buyers it covers, or a refusal to carve out buyers you already know
- Vague answers about their actual close rate or the number of listings they carry
- No written buyer screening process before financials are released
- A fee that is owed as soon as an offer comes in, whether or not you accept it
- Any suggestion that you do not need your own attorney to read the listing agreement or the purchase contract
- Pressure to sign at the first meeting, or a discount that expires today
- No named attorney or CPA they routinely work with on transactions
What to Have Ready Before You Meet
- Three years of tax returns and profit and loss statements, plus year to date figures
- A list of owner benefits and one-time expenses you believe are add-backs
- Your lease with the assignment and option language flagged
- Revenue by customer, so you can see your concentration before a buyer does
- An org chart showing which tasks only you perform today
- Your own answer to why you are selling and what timeline you need