How do Business Brokers get paid when there isn’t enough cash?

professional profile

January 05, 2022

by a professional from Bishop's University in Moncton, NB, Canada

Cassio asks how brokers get paid when there is a seller note. Does it matter?

Should this concern a buyer?

What about the seller?

What if there’s no money to pay the broker?

I look at this from the point of view of the different parties and talk about some of the solutions I had to come up with when I was a broker, dealing with broke sellers.

Watch this week’s video here: https://youtu.be/ImglpvXOL3k


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Reply by an intermediary
from Boise State University in 800 W Main St, Boise, ID 83702, USA
Reputable business brokers have a signed compensation/listing agreement with the seller. The broker can decide to take payments over time or can get paid separately from the seller. This is generally not an issue. The only time a buyer is liable for a broker commission is if that buyer goes around the broker and tries to do a deal with a seller that is represented by a broker. This unethical activity usually requires collaboration between buyer and seller to exclude the broker. If the broker is representing the seller client well, and has vetted the seller client, this should never happen.
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Reply by a professional
from University of Southern California in North Palm Beach, FL, USA
Here's a variation that I hope searchers/buyers don't see or agree to:
Broker NDA commits searcher to be liable for broker commission even if not buying the business.
https://drive.google.com/file/d/1EcTDKLb8_h7j-2fWibjc6aOMM6jKoTR2/view?usp=sharing

(I have a folder full of that kind of nonsense.)
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