What is Business Broker?

Business broker is person, entity, organization, company, or agency that involves in intermediary negotiation between seller and buyer. The brokers act as a bridge to make sure both parties can negotiate and reach agreement related to product and service that they offer. They work as part of client either seller or buyer. On the other hand, some companies offer independent brokerage service that helps both parties as clients.

As brokers, the regulations are mandatory to follow. Each country and state has different business regulation. In this case, the brokers have to understand the way this thing works. Seller can be a client of brokers because lack of information when selling. Moreover, the negotiation may take place in different countries. As solution, broker will assist with necessary service until negotiation reaches the deal with seller. This is basic principle of business broker.

Business Broker Definition

The term business broker evolves due to nature of business, technology, society, and environment. In past time, a person became broker because he sold product that's not owned by him. This definition expanded to companies, organization, and business entity. Furthermore, the broker is not just intermediary because business develops side by side with technology. To stay in market, it evolves additional services, such as data collection, sale and marketing analysis, advertisement agency, and more related business.

Becoming business broker requires license. Company needs to put all documents regarding business they will do. However, broker is vast field without strict boundary. Due to nature of business itself, license only applies to the area that involves sensitive and critical factor.

What Does a Business Broker do? Example

The brokers will do what client wants until the contract and agreements are done. Mostly, they work from initial approach to seller or buyer then involves in negotiation to obtain reasonable price. Seller surely wants as much as profit as possible and buyers try to get the product as cheap as possible. Two different needs have to meet in one point. If the brokers are on seller side, they will do to reach satisfactory deal. This situation is similar for buyer. Therefore, the brokers provide negotiation service until reaching the reasonable and profitable deal.

Several methods are commonly applied in broker business to compensate their service. Clients can pay based on hourly, retainer, and success fee. Hourly relies on service based on time. On the other hand, most clients will choose success fee. The brokers can also receive the compensation after the deal is done. The fee based on certain percentage from overall sales.