Key Takeaways
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Compare commission, minimum fees, marketing expenses and GST together.
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The written appointment should explain how fees are calculated and when they become payable.
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There is no single fee structure that applies to every broker or business sale.
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Confirm agency terms, introduced-buyer provisions and withdrawal costs before signing.
A broker’s fee should be clear before the business goes to market. Ask for a written explanation of the work included, the costs payable upfront and any commission payable under the appointment. This guide explains what to compare; it is not a quote for Bond’s services.
Commission and Minimum Fees
A commission may be a percentage of the sale price, a fixed fee or a stepped calculation. Some appointments include a minimum fee. The total depends on the agreed terms and the size, complexity and work involved in the transaction.
Check the calculation base. Ask whether stock, plant, deferred payments or other amounts form part of the price used to calculate commission. A worked example using your anticipated sale price can make the terms easier to compare.
Confirm when commission is earned and when payment is due. Do not assume that every agreement makes commission payable only at settlement or that no fee can arise if a transaction does not complete.
Marketing and Other Costs
Marketing or engagement fees may be payable before a sale. Ask for the services covered, any separate expenses, whether unused amounts are refundable and whether an upfront payment is credited against commission.
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Advertising and portal listings.
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Photography and other marketing material.
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Preparation of the information memorandum and financial presentation.
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Additional campaign costs that require separate approval.
Your accountant, solicitor and other advisers generally charge separately. Include their costs and any relevant transaction expenses when assessing the likely net sale proceeds.
What the Broker Provides
Clarify the scope of service and who will carry out the work. Depending on the engagement, this can include:
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Appraising the business and discussing the asking price.
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Preparing marketing information and managing a confidential campaign.
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Qualifying enquiries and coordinating inspections.
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Negotiating commercial terms and liaising with the parties and their advisers.
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Coordinating progress through due diligence and settlement.
A broker coordinates the sale but does not replace independent legal, accounting or tax advice. Confirm the responsibilities of each adviser at the outset.
Compare the Appointment Terms
The commission percentage is only part of the comparison. Read the appointment and ask about:
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The agency type and duration, including any exclusive period.
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What happens if you find a buyer or sell after the appointment ends.
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Any minimum commission and the treatment of GST.
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Withdrawal, termination and reimbursement provisions.
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Which expenses need your approval before they are incurred.
For Queensland appointments, check the broker’s licensing and the applicable written appointment requirements. Have unclear commission or agency provisions explained before signing.
Assessing Value
Compare the proposed service, relevant experience, communication and approach to qualifying buyers. A lower fee does not by itself establish lower service, and a higher fee does not guarantee a better outcome.
Ask how the broker will support pricing, protect confidential information and keep the transaction moving. Decide whether the service and total cost suit the business and your circumstances.
Questions Before Signing
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What is the total fee at the expected sale price, including any minimum and GST?
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What is payable before sale and what happens if the business does not sell?
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When is commission earned and when is it due?
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What happens if I introduce the buyer or change brokers?
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Who handles the campaign and how will progress be reported?
Bond Business Brokers can explain the proposed fee structure and scope for your business before you decide to proceed.
Common Questions
Who normally pays the broker?
The party who engages the broker pays under the appointment terms. In a seller-appointed sale this is usually the seller; separately engaged buyer services may carry their own fees.
What happens if I find the buyer myself?
Check the appointment before signing. Exclusive agency terms and introduced-buyer provisions can affect whether commission remains payable.
Are quotes inclusive of GST?
Ask for written confirmation of GST, minimum fees, marketing expenses and the commission calculation base. Compare the total potential cost, not just the percentage.
This article provides general information only. Obtain advice from appropriately qualified advisers about your circumstances before entering into a transaction or relying on tax, legal or regulatory information.