Was just asked the question from a business owner what the "typical commission" amount is for a broker and if upfront fees are common?
My response to him about brokers commission was along the lines of:
In nearly all cases, it is the seller who pays for the services of a business broker. Thatís is broker's the commission, usually paid at escrow to the brokerage that listed the business for sale, representing a seller in marketing the offering and negotiating on behalf of the seller for favorable price and terms.
That payment is due as specified in the listing contract the seller and broker signed, authorizing the broker to market the business for sale and promising to pay the broker an agreed on amount for successfully generating a satisfactory deal for the seller.
Amount of the commission is completely dependent on what the seller and broker agree. Most brokers charge at least ten percent of the selling price and there usually is a minimum fee, often it is between three and six thousand dollars, depending on the brokerage, for achieving a transaction, even if there is such a low selling price that the minimum exceeds the agreed-on percentage, such as ten percent, of the selling price. If the listing broker obtained the buyer, the brokerage receives the entire commission which may be divided among agents of the brokerage who were involved in the transaction.
If the buyer was introduced to the business by a different brokerage - not the listing broker, the commission will be divided by the listing and the selling brokers, usually on a 50/50 basis. On occasion, a buyer will engage a broker to help in the search for and purchase of a business. Under those circumstances the buyer will pay an agreed-on amount - usually a flat fee - from a few thousands to several thousand dollars, depending on the size and difficulty of the transaction - to the broker for services involved in finding and helping to negotiate the purchase of a business.
I would like to hear from my fellow BizBen Users and Readers what they feel it the typical brokerage fees - commissions, upfront fees, etc. Comment (and reply to comments given) above on this discussion and join in.