The length of exclusivity with a business broker can vary, but it is typically between 3 to 12 months, depending on the broker and the complexity of the business being sold. Here’s what to keep in mind:
- 3-6 months: This is common for smaller or simpler businesses that might not require extensive marketing or a long period to find a buyer. For example, a local retail shop or café might fall under this timeframe.
- 6-12 months: Larger businesses or those in niche industries might require a longer exclusivity period. This gives the broker enough time to conduct proper valuations, market the business effectively, and find serious buyers. For example, a manufacturing firm or tech start-up could have a 12-month exclusivity period.
Factors to Consider:
- Size and complexity of the business: The larger or more specialised the business, the longer the exclusivity period may need to be.
- Market conditions: If it’s a tough market or the industry is slow-moving, brokers may push for longer periods to ensure they have enough time to secure the right buyer.
- Broker’s marketing strategy: If the broker plans to invest heavily in advertising or reaching specific buyer networks, they may ask for a longer exclusivity period to recoup their efforts.
Important Points:
- Negotiate flexibility: If you’re unsure about committing to a long-term agreement, ask for a shorter period with the option to extend if progress is being made.
- Termination clauses: Make sure to understand the terms for ending the agreement early if the broker isn’t performing or if you find your own buyer.
- Post-exclusivity restrictions: Some agreements may include clauses that entitle the broker to a commission if the business sells to a buyer introduced during the exclusivity period, even if the sale occurs after the exclusivity ends.
Always review the terms of exclusivity carefully to ensure it suits your needs and timeframe.
Originally published by BusinessBusStop.com and selected for the Wise Business Advice archive.
Jonathan Fagan is MD of Ten-Percent.co.uk Limited and TP Recruitment Limited, a set of websites involved in a range of recruitment work. Jonathan has been running small businesses for over 20 years and has a number of interests and investments in companies as diverse as transcription, legal recruitment and a bit of marketing. He is an author of a number of guides and books, together with a children’s novel. In his spare time he enjoys playing golf, cricket, coaching girls’ football, operating a parent taxi, lots of running and paddleboarding on Bala Lake and the River Dee. He is a strong believer in a good work-life balance and regular blogs on making money vs enjoying life. Jonathan’s website is https://www.jonathanfagan.co.uk