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.