What a Business Broker Actually Does
- Valuation and pricing — grounding the asking price in comparable transactions and the business’s earnings.
- Confidential marketing — preparing a teaser and a confidential information memorandum (CIM), and reaching buyers without tipping off staff, customers or competitors.
- Buyer screening — qualifying buyers for financial capacity and intent before any sensitive information is shared, under a non-disclosure agreement.
- Deal management — coordinating the letter of intent, due diligence, financing and closing alongside the lawyers and accountants.
How Brokerage Is Regulated in Canada
Unlike real-estate agents, business brokers are not licensed under a single national regime. The key distinction is whether the transaction involves real property. When it does — for example, selling a business together with the building it operates in — the broker generally must be registered under the relevant provincial real-estate legislation, such as the Real Estate Council of Ontario (RECO) in Ontario or the BC Financial Services Authority (BCFSA) in British Columbia. Pure asset or share sales that do not include real property fall largely outside that framework.
Because the bar to entry can be low, credentials matter. Look for advisors who hold recognized designations (such as the Certified Business Intermediary, CBI) or who belong to established bodies like the International Business Brokers Association (IBBA), and always check references from recently closed deals.
How Broker Fees Work
Most business brokers are paid a success fee — a percentage of the sale price, payable on closing. On smaller main-street businesses this is often in the 8%–12% range; on larger lower-mid-market deals, advisors frequently use a Lehman or “double Lehman” scale that steps the percentage down as the price rises. Some also charge an upfront engagement or retainer fee, which may be credited against the success fee. Always confirm what triggers the fee, how “sale price” is defined (asset vs. share deal, earnouts, vendor take-backs), and the length of the exclusivity and tail period.
Do You Even Need a Broker?
Not always. Buyers can approach sellers directly, and sellers with a known buyer (a competitor, a key employee, or a family member) may not need to pay for marketing. ExitToBuy is built to work either way: you can transact directly with a verified counterparty or bring your own broker, and verification and escrow apply in both cases. What you should not do is skip the lawyer and accountant — the deal structure and tax treatment are where value is won or lost.