About 10,000 businesses are sold in the United States every year.
If you’ve been in business for a while, you’ve probably heard about acquisitions. Selling a business is an ideal way to cash in and exist from an industry. Buying a business means you don’t have to start from scratch, which increases your chances of success.
At the heart of these buy/sell transactions are business brokers.
In this article, we’re answering the question, “what is a business broker?” and telling you what you can do to join this line of business.
What Is a Business Broker?
You already know a business broker is involved in the sale or purchase of businesses, but that’s a general view of their role.
For starters, a business broker can either be a registered company or an individual. Buying or selling a business is a complicated, multi-step process that involves company valuation, price negotiations, assessment of financial and ownership records, and more.
Business brokers take part in every step along the way. When working with a business seller, their aim is to ensure the owner sells the business at a good price, while maintaining confidentiality. When working with a business buyer, their aim is to ensure the buyer gets the best deal.
A business broker can specialize in specific industries. For example, technology business brokers only take part in the purchase or sale of technology businesses.
It’s also possible for a broker to specialize according to the market value of businesses. For example, a broker can specialize in selling or buying businesses that have a market capitaliz ation of at least $100 million.
How to Become a Business Broker
You’re probably wondering how to become a business broker — and with good reason. Business brokers earn a commission, ranging from 3 to 10% of the sale price, depending on the size of the business and other factors. It’s a lucrative business.
There’s no standard path to becoming a business broker, but you typically need to have an advanced business, finance, or accounting knowledge, as well as vast industry experience. Many brokers are certified public accountants who have practiced for several years.
As a beginner, you can start out by finding employment in an established business brokerage. Here, you’ll work as part of a team, selling and buying businesses on behalf of your employer’s clients.
As you learn the trade and gain more experience, you can then branch out and start your own business brokerage. Running a successful brokerage requires great business acumen in addition to your professional training and skills.
The Path to Becoming a Business Broker
So, what is a business broker? To recap, this is a company or an individual that handles the purchase or sale of an established business. They earn a commission after every successful transfer of business and there are other charges that are usually levied. With this guide, you now know the path to follow when you want to become a business broker.
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