Open Listings vs. Exclusive Listings

a href="http://www.bizben.com/brokers/27015.php">Joe Robertson, a principal and business broker with Southern California Business Brokers has written a great article on the representation differences business owners can expect from business brokers listing their business. Some exerpts from this article include:

When it comes to selling your business, an exclusive listing with a business broker provides the greatest likelihood of success for both the seller and the broker.

Only a limited number of business brokers will accept an open listing, and typically, a broker that chooses to work with such a limited commitment from a seller will NOT provide the greatest amount of effort to sell the business.  Likewise, the commitment level of the seller is questionable.  To understand this point in more detail, let’s start with a definition of the two types of listings.

Open Listing:

An Open Listing is an authorization to sell a business or property.  It may be given to several brokers concurrently or the business may be sold by the owner himself.  There is usually no time limit associated with this type of listing.  If the owner sells the property through his own efforts, he is not responsible to pay commissions to any of the listing brokers.  An open listing may be canceled by either party at any time.

Exclusive Right-to-Sell Listing:

The Exclusive Right-to-Sell listing is the most common type of listing.  It provides one broker the right to sell the business exclusively.  This listing entitles the broker to commissions on the sale during the life of the listing agreement, even if the owner himself sells the business.  This type of listing runs for a specific period of time, usually six months.  The agreement may only be cancelled by the listing broker during that period.

Initially, the open listing may sound like a great way to maintain more options; however, typically this type of listing agreement is a waste of time for both the seller and the broker.  Here are a few reasons why this agreement can be counter-productive.

Categories: Selling A Business