What does a business broker actually cost?
How broker fees work in Australia, what you get for them, and when selling privately genuinely makes more sense. A straight comparison with no sales pitch.
General information only, not financial, legal or taxation advice. Tony Pope holds Queensland Office of Fair Trading licence 4963575.
The short version
- Brokers are generally paid a success fee on completion, so most of the cost only arises if the business sells.
- You do not need a broker by law. Where a buyer already exists and is committed, a private sale can be sensible.
- The value a broker adds is buyer reach, confidentiality, qualification and competitive tension, not paperwork.
- Selling privately means you handle confidentiality yourself, which is where most private sales come unstuck.
Owners are often reluctant to ask this directly, which is odd, because it is the most reasonable question there is. Here is a straight answer, including the situations where you would be better off not using a broker at all.
How broker fees work in Australia
The usual structure is a success fee payable on completion, calculated as a percentage of the sale price, sometimes with a smaller upfront contribution towards marketing.
Percentages vary with the size and complexity of the business, and smaller businesses generally carry a higher percentage because the work involved does not scale down proportionally. Some engagements include a minimum fee.
Whatever the structure, get it in writing before you sign anything, and make sure you understand what triggers the fee and what happens if you withdraw.
What the fee is actually paying for
Not paperwork. Your solicitor prepares the contract and your accountant handles the tax.
What a broker is paid for is an evidence based view of what the business will actually sell for, reach into a buyer database well beyond your own contacts, running the process confidentially so your staff and customers do not find out, qualifying buyers so you are not opening your books to tyre kickers or competitors fishing, and holding the process together through due diligence, which is the stage where a sale is most exposed.
When a private sale genuinely makes sense
Where a committed buyer already exists. A family member taking over. A long standing employee. A competitor who has approached you directly and seriously.
In those situations much of what a broker provides has already happened. You still need a solicitor and an accountant, and you should still get an independent view on price, but paying a full success fee to introduce a buyer you already have is hard to justify.
When selling privately tends to go wrong
When there is no buyer yet. Finding one privately means either advertising, which destroys confidentiality, or working your own network, which is small and full of people with reasons to talk.
It also tends to go wrong on price, because a single interested buyer has no competition and knows it. Competitive tension is not a sales pitch, it is the mechanism that sets the number.
Confidentiality: the part owners underestimate
This is the most common reason private sales come unstuck. Once word is out it cannot be recalled, and the damage arrives quietly through resignations, hesitant customers and tighter supplier terms.
A broker markets anonymously and does not release identifying information until a buyer has signed a confidentiality agreement and been qualified.
Questions worth asking any broker before you sign
How the fee is calculated and what triggers it. The length of the agreement and how to exit it. Whether the appraisal is based on comparable evidence and whether you can see the reasoning. Who does the work, and whether it is the person in front of you. How buyers are qualified before anything identifying is released.
If the answers are vague on any of those, keep asking.
Common questions
Can I sell my business without a broker in Australia?
Yes. There is no legal requirement to use one. It works best where you already have a committed buyer and straightforward terms.
How are business brokers paid?
Generally a success fee on completion, sometimes with a smaller upfront contribution towards marketing. Structures vary, so ask for it in writing.
Is it cheaper to sell privately?
In fees, yes. Whether it is cheaper overall depends on what price a single unqualified buyer offers compared with several qualified ones, and on what a confidentiality breach would cost you.
Keep reading
All notes on selling a business · All seller guides · What is my business worth?
Check it yourself
Primary sources, none of them affiliated with me and none of them endorsing this site. Where anything here differs from an official source, the official source is right.
Links open on external government and industry websites. The full list sits on licensing, registers and official sources.
Ask what it is worth
Free, in writing, and nobody finds out you asked. Tell me the trade and the suburb and I will do the rest.
Nobody finds out you are selling. This goes to me only, into my own database in Sydney. I will not contact your accountant, your landlord, your bank or your staff, ever, unless you ask me to.
If you would rather not put anything in writing yet, ring 0431 124 128. Prefer to pick a time yourself? Book a time in my diary.
Thinking about selling?
Thirty minutes, on the phone or in person, at a time that suits you including evenings. You will get a straight read on where the business sits today and what would move the number. It costs nothing, there is no obligation, and nobody finds out you asked.