A business broker is a lot like a commercial real estate broker. The resounding difference is that a commercial real estate broker sells a physical space, while a business broker sells the actual business that occupied that space.
Though these two types of brokers don’t work together, they do have a lot of overlapping duties and obligations. There are also, however, some key differences, all of which are outlined below.
Similarities
• Brokerages are full-service and commission-based
• Sign listing agreements that outline fiduciary obligations
• List sales on a Multiple Listing Service
• Create marketing materials that highlight the item for sale
• Search for and pre-screen buyers
• Sales can take six months to a year to complete
• Must stay up to date on latest data and trends in their geographic markets
• Negotiate with buyers to secure the maximum price or terms for the seller
• Can hold earnest payments in escrow
• Assist with the due diligence process
Differences
• Commercial brokers usually receive a 3% to 5% commission; business brokers normally receive a 8% to 15% commission
• Business brokers typically work on deals worth less than $10 million; commercial brokers can work on deals at all price points
• Commercial brokers are licensed in every state; not every state requires a business broker license (and some states require additional licensing)
• Business brokers must maintain the highest level of confidentiality while securing potential buyers of a business; commercial brokers work at varying levels of confidentiality
• Business brokers help clients establish a Most Probable Selling Price Valuation; commercial real estate brokers are not involved in the appraisal of buildings
• Commercial brokers can be granted power of attorney to sign purchase or closing documents; business brokers cannot be granted such privileges for the same purpose