As Dallas business brokers, we are often asked how much we charge. So, we decided to write a comprehensive review discussing the general costs of acquiring a Dallas business broker. Keep in mind, this is general information about brokers in general. Every business brokerage in Dallas has their own pricing method. Although we only charge success (commission) fees and view upfront fees as a potential scam, other business brokers may charge upfront fees (and other forms of fees that are not contingent upon a successful sale).
A Dallas Business Broker Explained
A Dallas business broker is an intermediary that represents either the seller or the buyer during a business sale. For sellers, they can determine the company’s worth, help the seller prepare, and find a qualified buyer in a manner that protects confidentiality. They may also assist with due diligence and closing as well.
Dallas business brokers understand the local market for businesses in various industries. They have connections, contacts, databases, and networks that they can leverage to ensure a successful company sale. Moreover, Dallas business brokers are able to protect confidentiality to ensure business operations and performance are not compromised during the sales process.
The Different Types of Dallas Business Brokers
There are different types of business brokers in Dallas. Specifically, there full-service, partial-service, online brokers, and consultants. In most cases, a full-service business broker is recommended. They help through the entire sales process, from providing a valuation to ensuring smooth and successful closing. Of course, they may charge more than a partial-service broker, but they on average are able to achieve a much higher sale price and make the process much easier for sellers.
The Types of Fees Dallas Business Brokers May Charge
It is important to understand how your business broker in Dallas is paid as this determines how, when, and how much you pay. Dallas business brokers may charge valuation, upfront, and/or success fees. Below is a more detailed explanation of each fee type.
Some business brokers in Dallas charge valuation fees. This is a cost associated with the valuation of your company. A valuation refers to a professional assessment of your company’s worth. This is usually based upon your company’s financial performance and recent sales data for your industry (rule of thumb data). The fees for a valuation may vary. However, most experienced and reputable business brokers in Dallas provide a business valuation for free.
Upfront fees are business broker costs that you pay before any service is performed. In this case, you are paying the business broker whether they deliver results for you or not. As you might imagine, this can disincentivize many brokers from performing the necessary duties to ensure you receive a fair sale price. In many cases, they may encourage you to accept an offer below market value if they are not paid any form of success fee.
When done correctly, however, an upfront may minimize the overall cost you pay if the broker is able to sell at or above market value. Upfront fees from a Dallas business broker can range from $1,000 to more than $50,000. Upfront fees are more common among partial-service business brokers (rather than full-service business brokers).
Success fees are great for several reasons. For one, you do not pay until after the sale closes. So long as the Dallas business broker does not also require you to pay upfront and/or valuation fees, then you may not pay anything to the broker until the sale is complete. Additionally, you are not paying out of pocket with success fees. Instead, the broker will take a percentage of the sale price. This is usually between 8% and 12% of the sale. This also provides incentive for the Dallas business broker to sell for the highest price as they would receive more by doing so.
How Much Can I Expect to Pay a Full-Service Dallas Business Broker?
A full-service business broker in Dallas who charges success fees only (and does not charge for the valuation or require any payment upfront) may only charge between 6% and 15% of the sale price. The exact amount depends on the size of your company and the industry.
On average, you can expect to pay a full-service Dallas business broker around 10%. If they are paid only via upfront fees, then you can pay anywhere from $5,000 to more than $50,000. In some cases, Dallas business brokers charge a combination of the two. It is important to ask full-service Dallas business brokers how much they charge before you sign a contract and begin working with them.
Contact Sigma Mergers and Acquisitions for a Free Business Valuation
Sigma Mergers and Acquisitions understands how to sell your business for fair market value. Whether you own a manufacturing company or a retail store, we can help. Additionally, we only charge success fees, so you never have to worry about excess costs upfront. To learn more and get started with a free business valuation , contact us today.
Sigma Mergers & Acquisitions sells businesses valued between $1 million and $100 million. We have helped sell 600+ businesses over the past 20 years. We charge NO upfront fees ever, and you pay us only when we sell your business for a price that meets YOUR goals.