How do I compare quotes from different business brokers?
Compare broker quotes by evaluating five core components: commission structure, service scope, marketing commitments, contract terms, and buyer reach — not just the headline fee percentage.
What broker quotes typically include
The International Business Brokers Association (IBBA), a US-based association, says business broker commissions on Main Street sales can range from 8% to 15% of the final sale price and may be subject to an agreed minimum (IBBA, Your Guide to the Business Brokerage Profession, 2021). Some brokers charge an upfront fee, for example for a Broker Opinion of Value, which is then applied against the closing commission (IBBA, Your Guide to the Business Brokerage Profession, 2021).
Quotes should specify the commission structure clearly — whether it's a flat percentage, a tiered model like the Lehman Formula, or a hybrid approach — and whether a minimum commission applies. The classic Lehman Formula charges 5% of the first $1 million, 4% of the second million, and so on down to 1%; "Double Lehman" starts at 10% and falls to 2% (Firmex, Global M&A Fee Guide 2024-25).
Commission structure comparison points
The lowest commission percentage is not always the best deal. For example, a broker charging 10% with a strong buyer network may close your sale faster and at a higher price than a broker charging 8% with minimal marketing effort. Brokers who specialize in a specific vertical or region typically charge fees at the higher end of standard ranges due to specialized buyer networks.
Pay attention to how the fee is calculated — some brokers base commission on the sale price, while others calculate it on enterprise value or adjusted EBITDA multiples. The calculation method can significantly affect your net proceeds.
Service scope differences between brokers
Full-service brokers typically handle buyer qualification, NDA management, transaction coordination, and document preparation as included services. Not all brokers offer the same scope. Some quotes may exclude services like financial restatement preparation, buyer financing coordination, or post-close transition support — services you may need to pay for separately.
Ask explicitly what is included in the quoted fee. Vague service descriptions are a red flag. A broker should be able to outline their process step-by-step, from initial valuation through closing.
Marketing and buyer reach commitments
Marketing commitments in broker proposals should specify listing platforms, reach targets, and frequency of updates to distinguish substantive from minimal-effort listings.
Brokers with transaction databases or proprietary buyer networks can demonstrate proven buyer reach through metrics like active buyer count, past sale timeframes, and buyer qualification rates. Ask for specifics: How many active buyers do they have in your industry? What was their average time-to-sale for businesses in your size range? How do they qualify buyers before sending your CIM?
If your business could attract buyers from outside your immediate area, a broker with broader geographic reach may be worth a higher fee.
Contract terms that matter beyond the fee
Exclusive listing agreements run for a fixed term. An unusually short term may indicate a broker who lacks confidence in their ability to sell your business; an excessively long one locks you in without recourse if the broker underperforms.
Tail provisions — clauses that entitle the broker to commission on sales to buyers they introduced even after the contract expires — run for a set period. Some agreements set longer tails, particularly for larger transactions or where significant buyer development work was involved; for a standard small business listing, an unusually long tail warrants scrutiny. Make sure the tail applies only to buyers the broker actually introduced and documented during the engagement.
Performance-based fee structures with lower retainers and higher success fees are becoming more common in Canadian small business brokerage. These structures can align the broker's incentives with yours, but ensure the success fee thresholds are realistic and don't incentivize the broker to push for a quick sale at a lower price.
Red flags in broker proposals
Warning signs include vague service descriptions, no specified marketing plan, unusually short or excessively long exclusive terms, and commission structures that incentivize quick low-value sales over optimal outcomes. A broker who cannot or will not answer questions about their process, their buyer network, or their recent comparable sales is not a broker you want representing your business.
If a broker's quote focuses heavily on the low commission rate but provides little detail on how they will actually market and sell your business, that's a red flag. The broker's job is not just to list your business — it's to find qualified buyers, manage the process, and close the deal at the best possible price.
This article is for informational purposes only and does not constitute financial, legal, or business advice. Every business sale is different. Before making decisions about engaging a broker or accepting a proposal, consult a qualified professional familiar with your specific situation.
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