Why YOU should choose an Exit Advisor over a Business Broker when navigating YOUR Business Sale
The traditional business brokering model comes at a high price and with a low success rate (note 1). After all these years of hard work - YOU, the Business Owner, deserve better than that!
The table below highlights the primary differences between working with an Exit Advisor Coach vs working with a Traditional Business Broker.
Why an Exit Advisor instead of a Business Broker? First, is the sizable cost difference between the two. An Exit Advisor’s fee is only 2% of the sale price, plus a small monthly fee (note 2), as compared to 10% - 12% that a business broker will take (note 1). On a small business sale of $500,000, assuming a 10% business broker rate, that’s $40,000 in savings! On a $1,000,000 sale, the difference is $80,000!
The savings can be huge. The table below shows the savings, based on sale price increments.
Reading Between the Lines
One might ask, “Doesn’t the business broker secure the best deal?” In some cases perhaps, in other cases, maybe not. There are significant compensation dynamics at play in a business brokerage transaction. The incentive structure tied to the business broker is based on a sale happening. No sale, no large commission. Thus, our position is that the process is flawed.
The challenge is that there are conflicting forces at play as the process itself plays out. A sale at a lower price is better than no sale at all in the eyes of the business broker, whereas the impact to the Business Owner is significant. An example of this is highlighted below:
The business broker stands to earn either $100,000 or $80,000, depending on which option plays out. In either case, a very large check. The uncomfortable reality is that the large commission check may influence deal dynamics.
The Business Owner, on the other hand, will not fare so well in the event Option II plays out. As seen above, the impact can be sizeable.
Note 1: Often, a business broker will charge a non-refundable retainer fee of between $2,500 and $5,000. This fee is credited against the commission at the time of the sale. Statistics indicate that only 1 in 4 businesses represented by business brokers actually sell (according to BizBuySell.com).
Note 2: The monthly fee is $299/mo. The fee structure is capped at 9 months.