FAQs: Selling your Business

Find answers to common questions about selling your business, from valuations to broker fees, and learn how to ensure a smooth, successful transaction.

What does business valuation mean?

Business valuation is the process of determining the economic value of a company using financial metrics, industry standards, and valuation methods such as discounted cash flow or comparable market analysis. It provides a calculated estimate of the business's worth, often used for sales, mergers, estate planning, or investment purposes. Explore our accurate Business Valuation Calculator.

How much do brokers charge to sell a business?

Business brokers typically charge between 5% and 10% of the sale price of the business, though the exact amount can vary based on several factors:

Size of the Business: For smaller businesses (under $1 million in sale price), fees are usually around 10%. For larger transactions, the fee often decreases, sometimes even falling to 2% to 5% for businesses valued at several million dollars.

Flat or Tiered Fees: Some brokers may use a tiered structure, where the commission rate decreases as the sale price increases. For example:

  • 10% on the first $1 million
  • 5% on the next $1-2 million
  • 2.5% on amounts over $2 million

Upfront Fees: Some brokers may charge an initial fee or retainer to cover marketing costs and preparation, though many work solely on commission, with fees paid after the sale is completed.

Other Costs: In some cases, brokers may also charge for additional services, such as business valuation or preparing documents.

It's essential to discuss the fee structure with the broker upfront to avoid surprises. Want to learn more? Dive deeper.

Does cash flow count in a business valuation?

Yes, cash flow is a key factor in a business valuation. It helps determine the company's ability to generate profits and sustain operations over time, making it a critical indicator of financial health. Many valuation methods, such as the discounted cash flow (DCF) approach, rely heavily on cash flow projections to assess the present value of future earnings. Buyers often consider cash flow to evaluate the potential return on investment and overall viability of the business.

Business valuation template

Here’s a simplified business valuation template that covers the key components you can use to estimate a business’s value. It includes sections for financial data, valuation methods, and other important factors that influence business worth.
This template provides a structured way to calculate a business's value, using both financial data and intangible factors. You can adapt the template to fit specific needs and valuation methods, such as adjusting for local market conditions or adding industry-specific details.

How much is a business valuation?

A business valuation typically costs between $1,000 and $10,000, depending on the complexity and size of the business. For larger or more complicated businesses, valuations can exceed $20,000. Explore our valuation calculator ->

What is sde business valuation?

SDE = Net Income + Owner's Salary + Owner's Perks + Non-Essential Expenses + Interest + Taxes + Depreciation + Amortization

This formula helps determine the total financial benefit an owner derives from their business, providing a clearer picture of its value to potential buyers.

More Resources When Selling Your Business

Business Broker Process

Review the key steps of selling a business from a broker's perspective to understand what to expect.
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How We Help You Sell

We leverage a cutting-edge framework to perfectly match sellers (like you) with the right-fit brokers, ensuring seamless transactions and optimal outcomes for business sales.
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