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Swyft Filings is committed to providing accurate, reliable information to help you make informed decisions for your business. That's why our content is written and edited by professional editors, writers, and subject matter experts. Learn more about how Swyft Filings works, our editorial team and standards, what our customers think of us, and more on our trust page.
Business deals can be complex and time-consuming because administrative requirements vary by jurisdiction. Business brokers are typically agents or companies that can help in the sale or purchase of small businesses. Through their insights and expertise, they can act as an intermediary between the buyer and seller, simplify due diligence, navigate the sales or purchase process, negotiate prices, and more.
Business brokerage is also a lucrative industry, with over 13,000 individuals and close to 4,000 businesses engaged in the U.S. market.[1]
Key Takeaways
Business brokers are individuals or companies that facilitate the sale or purchase of small businesses.
17 states require a business broker license, and some states require business brokers to have real estate licenses.
If you want to avoid the paperwork, a third-party service can help you apply for a business broker or real estate license.
What Is a Business Broker?
A business broker is a person or company that helps in the purchase or sale of small businesses.[2] Whether you are buying or selling a small business, there are benefits to hiring a business broker to help facilitate a smoother transaction. Business brokers can help negotiate terms and prices, request and complete all necessary paperwork, and filter potential buyers.
Interested in becoming a business broker? You must understand the requirements necessary on a state level as they vary. For more resources, you can visit the largest non-profit community supporting business brokers, International Business Brokers Association (IBBA).
Who Can Be a Business Broker?
While no mainstream, formal skills are required to become a business broker, many brokers have a background in accounting, finance, or sales. Some states don’t require a business broker license but do require a real estate license.
There are also sources available to support business brokers and strengthen their reputations. Membership in the IBBA and its Certified Business Intermediary (CBI) credential also indicate the business broker’s positive reputation in the industry. Another credential is the Accredited Business Intermediary (ABI), available through the American Business Broker Association (ABBA).
States That Require a Business Broker License
The following 17 states require business brokers to be licensed by the state’s real estate regulatory agency:
Alaska
Arizona
California
Colorado
Florida
Georgia
Idaho
Illinois
Michigan
Minnesota
Nebraska
Nevada
Oregon
South Dakota
Utah
Wisconsin
Wyoming
If the business broker is handling real estate along with the sale of the business, all states do require a real estate license. However, most small- to medium-sized businesses lease their locations and no real estate is involved in the sale.
Some states not listed above have other requirements for business brokers, too. For example, the Texas Association of Business Brokers (TABB) designates some members as Board Certified Brokers, but only after they take a test. The California Association of Business Brokers (CABB) has its own credentialing process that includes additional educational requirements and work experience.
How to Get a Real Estate License
Every state has different requirements for obtaining a real estate license, so research what your state requires or find a third-party service that will do the research and paperwork for you. Many states require educational courses and passing an exam to obtain a license. Here are some high-level steps for how to get a real estate license:
Visit the Association of Real Estate License Law Officials (ARELLO) to learn the unique licensing requirements for each state
Sign up for a pre-license course from an accredited real estate licensing school
Take the real estate license exam for your state
Submit an application to the state’s real estate regulatory authority
If you’re interested in obtaining a real estate or business broker license without the hassle, Swyft Filings has an easy-to-use portal that can help with this on federal, state, and local levels. With years of experience, our staff will help you identify which licenses your business needs and help complete all the paperwork required so you can focus on helping your business grow.
What Does a Business Broker Do?
A Broker’s Role in Selling a Business
When selling a business, business brokers act as intermediaries between the buyer and seller. For those that don’t have the time, business brokers can help lessen the burden by:
Identifying potential buyers
Completing business valuations
Navigating the sales process
Negotiating the sales price
Completing all the paperwork
A Broker’s Role in Buying a Business
Brokers can help potential business buyers identify opportunities, including purchasing franchises. Business brokers act as intermediaries between the buyer and seller across different sectors, such as health care, real estate, and e-commerce. Their roles include:
Negotiating the asking price
Organizing the necessary paperwork
Highlighting the purchaser’s strengths as a potential buyer
Pros and Cons of Business Brokers
Buying or selling a business is a big deal. Understanding the advantages and disadvantages of using a business broker can help ensure everything goes smoothly at every stage of the process.
Advantages | Disadvantages |
Everything regarding the transaction will be kept confidential at all times. The business broker will help you determine the best valuation of your business. The business broker gathers and completes all necessary paperwork for the sale. The broker can identify and screen potential buyers and gather all the information needed on your behalf. | May be unfamiliar with your business. Might not have specific expertise in the sector you need. Might charge high fees, usually a commission percentage of the sale price. This is typically between 8 to 12% depending on experience and geographic location. |
Business Brokers vs. Real Estate Brokers
While both business brokers and real estate brokers facilitate transactions, they operate in different industries, handle different types of transactions, and require different skill sets and expertise. In short, business brokers focus on the sale and purchase of businesses, while real estate brokers deal with the buying, selling, or leasing of properties.
Business Brokers | Real Estate Brokers |
Help businesses evaluate the value of assets for sale or purchase Facilitate the sale or purchase of small businesses Ensure all transactions are confidential May not require a license, depending on the specific state laws Typically fewer in number than real estate brokers
| Help owners evaluate the value of their real estate Operate on larger transactions Are less likely to ensure confidentiality when including the sale or purchase of land Must have a real estate broker license in the state they operate Can start their own brokerage and hire agents Are generally paid a commission, plus a cut from what their agents receive |
Business Brokers vs. Investment Bankers
A business broker and an investment banker are both professionals involved in financial transactions, but they serve different roles and cater to different types of clients. Business brokers generally focus on small to medium-sized businesses and handle relatively simpler transactions, while investment bankers specialize in complex financial deals for large corporations and institutional investors.
Business Brokers | Investment Bankers |
Usually support small business purchases or sales May charge a commission based on a percentage of the sale price (between 8-12%) Others charge an hourly rate depending on their expertise and experience (between $50 to $300 per hour) | Usually work at institutions that service both publicly traded and privately traded companies Usually only work on very large deals with values of $100 million or more Generally charge a large minimum fee for work upfront Provide a long list of other financial services |
Business Brokers vs. M&A Advisors
Business brokers and M&A (Mergers and Acquisitions) advisors are both professionals involved in facilitating business transactions, but there are differences in their roles, scope, and expertise.
Business Brokers | M&A Advisors |
Usually support small business purchases or sales May charge a commission based on a percentage of the sale price (between 8-12%) or an hourly rate depending on expertise and experience (between $50 to $300 per hour)
| Usually support mid-size to larger transactions Typically charge a fixed retainer fee upfront Sometimes have access to a wider range of potential buyers May have a longer-term relationship with businesses because of the nature of strategic operations |
Apply For Your Business Broker License in Minutes
The Swyft Filings portal offers a fast and reliable service without the endless paperwork and headaches. Leave the research and paperwork to Swyft Filings while you focus on your day-to-day operations and obligations. Applying for your business broker license through our platform is easy and only takes a few minutes.
FAQs
What is a business broker?
An individual or company that provides the professional services of facilitating the sale or purchase of small, main street businesses. Many business brokers are former business owners who sold their businesses before transitioning their careers.
How can I become a business broker?
While no formal skills are required to become a business broker, many people have an education in accounting, finance, or sales. Some states don’t require a specific business broker license, but they do require a real estate license or other educational requirements. Check your local jurisdiction for licensing requirements.
Swyft Filings can help you obtain the business licenses you require through its one-stop-shop portal. Our team of business professionals can help you figure out which permits or licenses you need first and then help you with the applications at the federal, state, and local levels.
Can I sell a small business without a business broker?
Yes, although this can be more risky and very time-consuming. Business brokers can facilitate the sale on your behalf, making the overall process smoother and less burdensome.
What are the benefits of using a business broker?
Business brokers are experts in their field. They help provide the best valuation of your business, gather and complete all the necessary paperwork for the purchase or sale, and can screen potential buyers on your behalf. All communications with business brokers are confidential, and they can provide a smoother purchase or selling process overall.
What is a business broker license?
A business broker license is an authorization granted by a state or jurisdiction that allows an individual to legally operate as a business broker and assist in the sale, purchase, or merger of businesses within that jurisdiction. Only 17 states require an official business broker license. Other states require other credentials for the business broker to operate.
Membership in the International Business Brokers Association (IBBA) or American Business Broker Association (ABBA) are highly regarded. All states require a business broker to have a real estate license if they deal with real estate alongside the sale or purchase of business assets.
Is a business broker license required in all states?
No. There are 17 states that require business brokers to be licensed by their state’s real estate commission — Alaska, Arizona, California, Colorado, Florida, Georgia, Idaho, Illinois, Michigan, Minnesota, Nebraska, Nevada, Oregon, South Dakota, Utah, Wisconsin, and Wyoming.
If the broker handles any real estate alongside the sale of a business, all states require a real estate license.
How do you buy a business?
Before buying a business, consider whether you would like to hire a business broker to help you in the process. There are many ways to purchase a business. The Small Business Administration (SBA) provides detailed information on how to buy a business.[3]
How can I start a business broker business?
It varies depending on the jurisdiction. First, check that you have the educational requirements for your state.
If you require any help, let Swyft Filings tell you what licenses you may or may not need without all the hassle of having to dive deep into each state authority’s page.
Bibliography
IBIS World. “Business Brokers in the US industry statistics.” Accessed June 16, 2023.
International Business Brokers Association. “Glossary.” Accessed June 16, 2023.
U.S. Small Business Administration. “Buy an existing business or franchise.” Accessed June 16, 2023.
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