What a good business broker actually does for you

Businesses sell for 6 to 25% more when the owner uses a broker or advisor, according to research cited by Axial. That gap isn’t from the broker filling out paperwork. It comes from the work most owners never see: creating real competition among buyers, protecting terms during negotiation, and keeping a deal together when a buyer tries to chip the price down after you’ve already agreed on a number.

Learn the basics of what a broker does and what they charge

Key Takeaways

• Owners using a broker sell for 6 to 25% more than owners who go it alone (Axial)
• A good broker creates competition among multiple buyers, which drives up offers
• Re-trades happen in 20 to 30% of deals after the LOI is signed
• Brokers negotiate terms most owners don’t know to ask for, including earnout structure, working capital targets, and indemnification caps
• Confidentiality protects your employees, customers, and deal price

Questions to ask before hiring a broker

Why does competition change what you get paid?

Competition is the most powerful thing a broker brings to a sale. When buyers know other parties are reviewing the same business, they stop anchoring on what they’d pay in a one-on-one conversation and start bidding to win. In competitive processes, sellers commonly receive 5 to 10 or more initial offers. Winning buyers have moved their offers up by 2x or more from their first bid when competition is real. That would never happen in a direct negotiation between one buyer and one seller.

The dynamic is straightforward. A buyer who thinks they’re the only one looking will take their time, probe for weakness, and offer less. A buyer who knows three other parties submitted offers last Tuesday will sharpen their number. Your broker creates that urgency by design.

How buyers value your business

What does the sale process actually look like?

A professional sale follows a specific sequence, and that sequence protects you at every step. Most owners who try to sell on their own skip steps or run them out of order. That costs them money and sometimes costs them the deal.

Here is how a good broker runs it:

1. Blind teaser. A one-page document describing the business without naming it. Industry, revenue range, geography, and a few operating highlights. No business name, no address.
2. NDA. Interested buyers sign a Non-Disclosure Agreement before learning anything else. This is the gatekeeper step.
3. CIM. Buyers who sign the NDA receive the Confidential Information Memorandum. This is the full picture.
4. IOI. The Indication of Interest is a buyer’s early, non-binding signal of what they’d pay and on what terms.
5. LOI. The Letter of Intent is a more formal, negotiated document that sets the agreed price and deal structure before the purchase agreement is drafted.

The sequence matters because each step controls what information gets out and to whom. Owners who skip the teaser and NDA steps often tell the wrong people too much, too early. A competitor who poses as a buyer can get a look at your customer list and pricing before signing anything that protects you.

What an LOI covers and what to negotiate

What negotiation happens that you’d never do on your own?

Price is what most owners focus on. But price is only one number in a deal that has dozens of terms. A good broker negotiates the things an owner doesn’t know to ask about, and those terms can swing the actual value of your deal by hundreds of thousands of dollars.

Working capital target. Every deal includes a working capital peg, an agreed amount of cash and receivables that must be in the business at closing. According to deal data from business sale research, 55% of deals result in a post-close adjustment in the buyer’s favor when this number isn’t negotiated up front. The buyer sets the target high, you hit closing thinking you got the full price, and a check comes back to them a few months later.

Representations and warranties. These are your promises to the buyer about the state of the business. Indemnification caps, your maximum financial exposure if something you said turns out to be wrong, typically run 10 to 20% of deal value in a negotiated deal. Without a cap, your exposure is unlimited. Most owners selling without a broker never negotiate one.

Earnout structure. If part of your price is tied to future performance, how those targets are set matters enormously. Research from Kroll found that earnouts pay out only 21% of their maximum value on average. A broker who structures the earnout metrics, and the accounting rules used to measure them, protects you from a number that looks good in the LOI and never arrives.

Escrow amount and release timeline. Buyers often push for 10 to 15% of the deal to sit in escrow for 12 to 24 months as a buffer against warranty claims. A broker negotiates the amount down and the release timeline shorter.

How earnouts work and what to watch for

What happens with re-trades, and why do they matter?

Re-trades are one of the most painful things a seller goes through. A re-trade happens when a buyer, after signing the LOI and starting due diligence, comes back with a lower price or worse terms. They happen in 20 to 30% of post-LOI deals. The triggers are usually something found during due diligence: a customer who looks like they might leave, a wage or sales tax issue the owner didn’t know about, an environmental finding on a property.

The problem isn’t that issues come up. Some always will. The problem is leverage. Once you’ve signed the LOI, you’re locked into exclusivity with that buyer, typically for 60 to 90 days. You can’t go talk to anyone else. If the buyer drops the price by 10% on day 75, you can walk away and restart a months-long process, or you can accept the lower number.

A broker who ran a real competitive process has leverage the solo seller will never have. They can go back to the re-trading buyer and say that another party is still interested, and they can mean it. That one fact changes the dynamic. The buyer who thought they had you cornered suddenly has a reason to hold their original price. Without another buyer in the picture, that conversation never happens.

Roughly 50% of all deals at the LOI stage fail to close, according to deal data from business sale research. Re-trades are a major reason. Owners who ran a competitive process and kept a backup buyer engaged lose fewer deals, and when they do face a re-trade, they negotiate from a stronger position.

How does a broker keep the sale confidential?

The thing owners fear most is usually not price. It’s the call from their best employee asking if the business is for sale. Or the message from a customer saying they heard something and they’re nervous. Or a competitor who gets wind of it and starts calling your foremen. Any of these can destabilize the business, and a destabilized business is worth less.

A broker controls information release through the process described above. The blind teaser goes out first, with no name attached. Only buyers who sign an NDA get the CIM. The business name and address are often not released until late in the process, sometimes not until due diligence begins. This structure means most buyers never learn which business they were looking at if the deal doesn’t advance.

Owners who self-represent tend to cut corners on this. They tell a friend who might know a buyer, they respond to an inquiry without an NDA in place, they share financials over email before any confidentiality agreement is signed. Each of those is a leak. A good broker runs a process where no information leaves without a gate first.

Broker vs. going solo: what’s at stake

How do you tell a good broker from one wasting your time?

The single biggest pattern among owners who had a bad broker experience: the broker gave them a high valuation in the first meeting, won the listing, and spent the next 12 months trying to lower expectations. This is called buying the listing. It’s common because brokers compete on the number they quote you, and a high number is easy to promise.

Volume is a red flag. A broker managing 100 or more active listings is spreading attention across too many clients to run a real process for any of them. A broker with 5 to 8 active deals at a time can know your business, work your buyer list, and pick up the phone when a complication surfaces.

Industry experience is not optional. A broker who has sold 10 HVAC businesses knows which buyers are active in the market, what service contract bases command at sale, and what multiples the trades are supporting right now. That knowledge is built over years. A generalist broker will learn your business at your expense.

The upfront fee rule. Legitimate brokers are paid a success fee at closing, typically 8 to 10% for businesses in the $1 million to $5 million range. If a broker asks for a large fee before any sale happens, walk away. A high upfront fee with a weak success-fee structure means they make money whether you sell or not. That is not alignment.

The right questions to ask:

• What percentage of your listings actually sold in the last two years?
• How many active listings do you personally manage right now?
• Can you name three HVAC, roofing, or plumbing businesses you’ve closed in the past 18 months?
• Walk me through exactly how you’d create a competitive process for my business.

If the answers are vague, you have your answer.

The full list of broker vetting questions

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How long does the process take?

Here is a realistic timeline for a typical business sale with a broker running a professional process:

Phase	Time
Preparation (financials, CIM, broker selection)	2 to 4 months
Going to market (teaser, NDA, CIM to buyers)	1 to 2 months
Offers and negotiation	1 to 2 months
Due diligence	60 to 90 days
Closing	30 to 60 days
Total	6 to 12 months

BizBuySell’s 2025 data puts the median time to close at 170 days, with businesses selling at 94% of asking price on average. That 94% figure represents all sales, including ones with weak processes. Competitive processes with multiple buyers tend to perform above the median.

The preparation phase is where most owners underestimate the time. Getting three years of clean financials together, building the CIM, and selecting the right broker takes longer than people expect. Starting that process early, before you’re ready to sell tomorrow, puts you in a much stronger position when the time comes.

How to prepare your business before going to market

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