How do brokers charge?
Find out how brokers charge a client when they agree to sell a business in this short video by Jonathan Jay, the founder of The Dealmaker’s Academy. In it, he explains why:
- It’s extremely important to understand the psychology of brokers
- Why you should research how specific brokers structure their fees before the negotiations begin
Prefer to read this? Here’s the transcript:
Hi this is Jonathan Jay from the The Dealmaker’s Academy.
Welcome to these tips videos on buying and selling businesses.
And a question I’m often asked is, how do broker’s charge?
How do they charge for their services when they sell a business?
Well there’s generally three or four categories of brokers. Some charge an up-front fee, and that’s it.
Some charge an up-front fee and then a success fee which might be three, five, seven percent of the sale value.
Some charge a success fee only, And some do some other high bridge where the success fee is on a ratchet with the more they get for your business, with you they versus selling the business, the more they get for the business, the more, the higher value, the more they get paid.
Either in a, typically on a percentage basis.
So, understanding the psychology of that particular broker is really, really important.
And understanding why and how they priced that deal is really important too.
So having market information, market knowledge about brokers and how they structure their deals, is really important when it comes to negotiating the deal.
So remember, if you’re doing this through a broker, we want the broker to be happy too, because they will help you, get the deal over the lines.
We want a happy seller, a happy broker, and as a result you become a happy buyer.
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