What does a business broker do is a fair question, because most owners have never worked with one and the title alone does not explain much.
The short answer is that a business broker manages the sale of your company from the first valuation through the closing table. The longer answer is where the value shows up.
I bought my first business back in 1990. For the past 26 years I have represented Arizona owners through this process.
Most owners picture a broker as someone who finds a buyer. Finding the buyer is maybe a quarter of the job.
Key Takeaways:
- What does a business broker do covers valuation, preparation, marketing, screening, negotiation, and closing
- The work starts months before any buyer sees your company
- Buyer screening protects both your confidentiality and your time
- Most of the effort comes after an offer arrives, not before
- A broker who disappears after the offer leaves you managing the hardest part alone
The Work Before Anyone Sees Your Business
Plenty happens before your company is ever shown to a buyer. This early stage shapes everything that follows.
It starts with understanding your goals. What do you need to net from the sale, what timeline works for you, and what happens to your employees after closing.
Then comes the valuation. A proper analysis takes one to two weeks once your financial records arrive.
That analysis pulls apart your financials and rebuilds them around true earning power. Owner pay gets adjusted to a market rate, one-time costs come out, and personal expenses run through the business get identified.
Sometimes those adjustments raise your earnings. Sometimes they lower them, as when an owner pays himself well below what a hired president would cost.
The valuation also surfaces weaknesses. Customer concentration, aging equipment, thin management, or bookkeeping that will not survive scrutiny.
Catching those early matters. You still have time to fix them, or at least to prepare an honest answer before a buyer asks.
Building the Materials That Sell the Company
Once the analysis is done, the next job is presenting your company properly.
The main document is a Confidential Information Memorandum, usually fifteen to thirty pages depending on complexity. Building it takes two to three hours of interviews with you plus considerable work afterward.
The CIM explains what the business does, how it makes money, who its customers are, what its assets are worth, and why the earnings are reliable. It answers most of a buyer's early questions before they ask.
This is where I have watched advisors torpedo good transactions. Thin materials, a spreadsheet with no context, a description that could apply to any company in the sector.
Buyers are naturally skeptical. The burden of proving value sits with the seller, and it is the broker's job to carry that burden with real documentation.
Good materials do something else too. They speed up due diligence later, because much of what a buyer would ask has already been addressed in writing.
Finding and Screening the Right Buyers
Now the outreach begins, and this is the part most owners imagine when they ask what does a business broker do.
Public advertising plays a small role. Most quality transactions come from direct, discreet contact with buyers who already fit the profile.
I keep in regular contact with a database of over 4,000 buyers. That includes private equity groups, family offices, high net worth individuals, and strategic acquirers.
The goal is not volume. The goal is reaching the specific buyers most likely to see value and synergy in your particular company.
Screening comes next, and it protects you in two ways.
Before anyone learns your company's identity, they sign a confidentiality agreement and provide financial information about themselves. Only after that does a buyer receive the CIM.
This keeps your business confidential while it is on the market. It also keeps unqualified people from consuming months of your time and attention.
| Stage | What the Broker Does | What It Protects |
| Valuation | Analyzes earnings and builds a defensible number | Keeps you from pricing wrong in either direction |
| Preparation | Identifies weaknesses and assembles documentation | Prevents surprises during due diligence |
| Marketing materials | Builds the CIM and supporting analysis | Proves value to skeptical buyers |
| Buyer outreach | Contacts qualified buyers directly | Reaches acquirers who would never see a public ad |
| Screening | Requires confidentiality agreements and financials | Protects confidentiality and your time |
| Negotiation | Evaluates and counters offers on your behalf | Keeps emotion out of the numbers |
| Due diligence | Manages verification and keeps momentum | Stops deals from stalling and dying |
| Closing | Coordinates documents, searches, and funding | Gets you to the finish line |
Negotiation and Managing the Deal
When offers arrive, the work changes character.
An offer usually comes as a letter of intent or a purchase agreement. It sets out price, terms, conditions, and contingencies, and every one of those items is negotiable.
Price gets the attention, but terms often matter as much. How much is paid at closing, what portion is deferred, what happens to working capital, and what you are asked to represent and warrant.
Deal structure matters too. An asset sale and a stock sale carry different tax outcomes and different liability exposure, and purchase price allocation across the IRS asset classes only comes into play in an asset sale.
Having someone negotiate on your behalf helps in a way owners underestimate. Negotiation is normal and it is not personal, but it is very hard to keep that perspective about a company you built.
A broker absorbs that friction. You stay focused on running the business, which matters because buyers are watching your performance the entire time.
Where the Real Work Happens
Here is the part owners never anticipate. Getting an offer is not the hard part.
Between a signed offer and a closing sits due diligence, typically completed within sixty days. The buyer verifies your financials, contracts, operations, and legal standing.
They will want tax returns, income statements, balance sheets, aging reports, bank statements, third party agreements, and more. The list runs long, and every answer needs to be consistent with the last one.
Someone has to manage that flow. Assemble documents, anticipate questions, and keep both sides moving when things stall.
And things do stall. A landlord sits on a lease assignment, a lien search turns up something old, or a buyer's lender wants one more item.
Momentum matters here. A buyer who cools off during a long delay often comes back with a lower number.
Then comes closing itself. Lien searches, title work if real property is involved, proof of clear title free of creditor claims and judgments, and coordination of documents and wires across every party.
After closing there is usually a transition period, sometimes a few weeks and sometimes a few years, where you help the new owner take over cleanly.
What Does A Business Broker Do About Fees and Compensation
How a broker gets paid tells you a lot about how they will behave during your transaction.
Most work on a success fee, often paired with a reasonable upfront fee. Success fees typically run between 3 and 10 percent of the sale price depending on size and complexity.
Smaller transactions command higher percentages. The workload is similar whether a company sells for $3 million or $30 million, so the percentage adjusts.
A structure weighted toward the success fee aligns your interests. The broker earns most of their compensation only when you close at a good price.
Be careful with firms charging large upfront amounts with little tied to the outcome. When most of the money arrives regardless of results, the incentive to push through a hard closing weakens.
Ask what the fee includes. Valuation, marketing materials, buyer outreach, and due diligence management should all be covered rather than billed separately.
What Separates a Good Broker From a Poor One
The title tells you almost nothing about quality. Here is what to look at instead.
Ask about their success rate. The industry average sits around 20 percent, meaning four out of five businesses that go to market never sell.
My own engagements close at about 80 percent. Any broker should give you a straight number rather than changing the subject.
Ask how many clients they handle at once. Someone carrying thirty engagements cannot give yours the attention it needs.
Ask to see sample marketing materials with confidential details removed. Promises about thorough marketing mean nothing without proof.
Ask who will actually do the work. Some firms send a senior person to win your business and hand the file to junior staff afterward.
Ask what happens after an offer arrives. A broker who glosses over that stage probably does not do much during it.
FAQ
What does a business broker do that I cannot do myself?
A broker brings a valuation methodology that holds up under buyer scrutiny, an existing network of qualified buyers, and the ability to screen and negotiate without emotion. They also manage due diligence while you keep running your company. Most owners sell once, and the learning curve is expensive when the stakes are your retirement.
How is a business broker different from an M&A advisor?
The terms overlap heavily and often describe the same work. Firms handling larger lower middle market transactions typically use the M&A advisor title, while the work itself, valuation through closing, is broadly the same. What matters more is the firm's success rate, credentials, and how many clients they carry at once.
When should I bring in a business broker?
Earlier than most owners do. Bringing someone in twelve to twenty-four months before you want to exit gives you time to fix the issues that lower your price. A valuation tells you where you stand well before you are ready to sell.
Does a business broker maintain confidentiality?
A good one treats it as the highest priority. Buyers are screened and sign confidentiality agreements before learning your company's identity, and sensitive details are released only to qualified parties. Confidentiality protects your value with employees, customers, and competitors.
How long does the whole process take?
Most transactions run six to twelve months from engagement to closing. Preparation beforehand can add twelve to twenty-four months when real fixes are needed. Due diligence alone typically takes up to sixty days after an offer is signed.
Getting the Right Person in Your Corner
What does a business broker do comes down to this. They turn a business you built into a transaction a buyer will complete, and they protect your interests at every step along the way.
The difference between a good one and a poor one shows up in your proceeds and in whether the deal closes at all. Ask hard questions before you sign anything.
Ready to sell your business?
Schedule a confidential market review and I will show you exactly what a business broker does for a company like yours.
