Questions to Ask a Business Broker Before Hiring One

The questions

Open any question to see why it works.

1. 1

   How many businesses have you sold in the past two years, and how many were in my industry?

   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.

2. 2

   Are you a full time broker, and how many listings are you personally handling right now?

   Many brokers sell part time or juggle twenty listings on a success-fee-only model, which means your business gets attention only when a buyer happens to call. Ten to twelve active listings per broker is a reasonable ceiling.

3. 3

   What credentials do you hold, and do you belong to the IBBA, M&A Source or a state broker association?

   Designations like CBI or M&AMI require coursework, closed transactions and an ethics code, and many states also require a real estate license to sell a business with a lease. Their answer tells you who can hold them accountable.

4. 4

   What is your commission rate, and do you have a minimum fee?

   Main Street brokers commonly charge eight to twelve percent, often with a minimum fee of fifteen to fifty thousand dollars. If your business is small, that minimum, not the percentage, is the number that actually applies to you.

5. 5

   Do you charge any upfront retainer, valuation or marketing fee, and is it credited against commission?

   Retainers are normal in lower middle market M&A but are a warning sign when a broker earns more from signing sellers than from closing deals. Ask whether the fee is credited at closing, which reveals where their incentive really sits.

6. 6

   How long is the listing agreement, and what does it take to terminate it early?

   Twelve months is standard, but some agreements auto-renew or allow no exit at all. You want a written cancellation right after a defined period of non-performance, not a promise that you can just walk away.

7. 7

   Does the agreement have a tail period, and can I carve out buyers I already know?

   A tail clause pays the broker if you sell to anyone they contacted for months after the listing ends, which can be reasonable. What is not reasonable is owing commission on a competitor or key employee you were already talking to, so get those names carved out in writing.

8. 8

   Who will actually handle my listing day to day, you or an associate?

   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.

9. 9

   What do you think my business is worth, and what method did you use to get there?

   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.

10. 10

    How will you market the business without my employees, customers or competitors finding out?

    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.

11. 11

    How do you screen buyers before you release my financials?

    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.

12. 12

    Which listing sites, buyer databases and outbound channels will you use for my business?

    Posting on BizBuySell and waiting is passive marketing. Ask whether they will run targeted outreach to strategic acquirers, search funds, private equity add-on platforms and their own buyer list, and how many of each they expect to reach.

13. 13

    How will you recast my financials, and which add-backs are you willing to defend to a buyer and a lender?

    Seller's discretionary earnings drive your price, so the broker's skill at documenting owner salary, personal vehicles and one-time expenses matters. Add-backs a lender will reject only create a valuation gap that reappears during diligence.

14. 14

    Of the businesses you listed in the last 24 months, what share actually sold, and how long did they take?

    Industry-wide only a minority of listed small businesses sell, so a broker claiming a near perfect rate is either selective about listings or rounding generously. Time on market also tells you how long you will be running the business while distracted.

15. 15

    How close do your final sale prices come to the asking prices you set?

    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.

16. 16

    How will a buyer most likely finance this, and have you closed SBA 7(a) deals at my size?

    For most sub-five-million transactions the buyer needs an SBA loan, and the loan rules dictate the structure, the seller note terms and the timeline. A broker who has not worked with SBA lenders will discover those constraints too late.

17. 17

    What deal structure should I expect: seller note, earnout, escrow holdback, transition period?

    The headline price is rarely all cash at closing. Push the broker to describe a realistic structure now so you can decide whether you can accept deferred money and how long you are willing to stay on after the sale.

18. 18

    Do you ever represent the buyer and the seller in the same transaction, and how do you handle that?

    Dual representation is legal in many states but puts the broker between your price and the buyer's. Ask how they disclose it, whether their fee changes, and whether they will simply decline it while you are their client.

19. 19

    What killed your last few deals, and what would you fix in my business before we go to market?

    This is the question that separates advisors from listing collectors. A good broker will name specifics such as customer concentration, messy books, an unassignable lease or your indispensability, and tell you what to repair first.

20. 20

    Can I speak with your last three sellers, including one whose deal did not close?

    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.