| If you are either the buyer or seller of a business | | | | likely be responsible for paying a fee of some |
| and there is a business broker involved as an | | | | sort to the buyer's agent. |
| intermediary, it is important you know what the | | | | Another more common scenario is a business |
| relationship is to either party. It is important to | | | | buyer who approaches a business broker on one |
| know who the business brokers are working for, | | | | of their business for sale listings on their own, |
| and the duty of care they are responsible to | | | | without another business broker on the buyer's |
| provide also. In other words, determine if they | | | | side. If you are the purchaser it is critical that you |
| have a fiduciary responsibility. | | | | know where you stand with respect to your |
| When a business is sold, a business broker | | | | relationship with the business broker from the |
| (typically) represents the seller. The business | | | | very beginning. There are a couple possible |
| owner is usually the client and the business | | | | outcomes here. A brokerage can take you on as |
| brokerage is the fiduciary. There is typically a | | | | a client where they would also treat you with a |
| contract drafted that stipulates the duty the | | | | fiduciary duty. In this case, they would be faced |
| broker has to the seller and vice versa. The | | | | with a multiple representation scenario and an |
| contract, or listing agreement, amongst other | | | | inherent conflict of interest does present itself. In |
| things, usually lays out terms of compensation | | | | order to act ethically and fairly to both parties in a |
| (commission rate, retainer, flat fee, etc.), term of | | | | dual-agency role, a brokerage must disclose from |
| the listing, business assets to be sold and who the | | | | the very beginning that it is representing both |
| seller is exactly. The key is that the business | | | | parties and also get written consent from the |
| broker is more often than not working for the | | | | buyer and seller of the business that they agree |
| seller from the very beginning. | | | | with this. In Ontario, a brokerage is governed |
| Another key take-away is that business for sale | | | | under the Real Estate & Business Brokers Act |
| listings are often "exclusive" and business | | | | which is a well-respected statute in the industry |
| brokerages do not co-operate with other business | | | | to provide protection to both sides. |
| brokers. Under these terms, a business broker's | | | | Another possibility is that a brokerage may |
| job is to find the buyer for the seller but he or | | | | represent a seller but not a buyer. A brokerage |
| she will most likely not split the commission if the | | | | still has an obligation to act with fairness, honestly |
| buyer came from another broker. Listings are | | | | and ethics to a buyer, even if they are not |
| most likely not MLS - they are exclusive to a | | | | represented. Here, a buyer can get their own |
| particular brokerage in most cases. This is most | | | | broker or decide to work on their own and rely |
| often the case in Ontario, Canada. | | | | on the advice of advisors such as their lawyers or |
| The role of the business intermediary is to find | | | | accountants. |
| buyers for the company and essentially put the | | | | Overall, if you are either a seller of a business or |
| deal together. A scenario may arise, however, | | | | a buyer and you must understand the role that a |
| where another brokerage does have the perfect | | | | brokerage plays in the deal. Do not hesitate to |
| buyer. In the case of an exclusive, | | | | talk to an attorney if you need further clarity. |
| non-co-operating listing, the buyer would most | | | | |