Selling a business is likely to be the biggest single financial transaction of your life, and you will probably only do it once. Your buyer and your broker do it for a living. That imbalance of experience shapes everything about how this market works, and it is why the terms you agree at the start matter far more than the headline fee.
Women founded a record 150,000-plus UK companies in 2022, more than double the 2018 figure according to the Rose Review, so a growing number of founders will be navigating a first sale over the coming years. This guide covers what a business broker actually does, what they charge, why the sector has almost no regulatory protection, and the contract terms that decide whether the relationship works for you or against you.
What a Business Broker Actually Does
A good business broker takes on five distinct jobs. Knowing where each one sits in the process helps you judge whether you are getting value for the fee.
- Valuation. They produce a confidential valuation, usually a working range rather than a single figure, based on your accounts, sector comparables and growth story. Ask what evidence sits behind the number. An inflated valuation is the oldest trick for winning a mandate, and it costs you months when the market disagrees.
- Information memorandum. They prepare the document that presents your business to buyers in a structured, professional way, covering financials, operations, customers and growth opportunities without revealing your identity too early.
- Discreet marketing. They take the business to market without alerting your staff, suppliers or competitors. Ask where it will appear: some brokers rely heavily on listing sites such as Daltons Business or BusinessesForSale.com, while others approach named buyers directly.
- Buyer vetting. They filter out tyre-kickers and check that interested parties genuinely have the funds or finance to complete.
- Negotiation and completion. They run negotiations and manage the deal through to the end, acting as a buffer so that hard conversations about price do not poison the working relationship you will need during handover.
Done well, a broker runs the sale process so you can keep running the business. That matters, because a typical small business sale takes six to twelve months from instruction to completion, and plenty take longer. Done badly, you end up doing most of the work yourself while still paying a success fee at the end.
Business Broker Fees: What UK Founders Can Expect
Fee structures vary more than most sellers expect, and the headline percentage rarely tells the whole story. As a rough guide rather than a fixed rule, typical business broker commission for small UK businesses sits between 3 and 10 per cent of the sale price. Some brokers quote up to 15 per cent on very small deals, where the fixed costs of running a sale process are harder to recover from a modest transaction value. Because the sector is unregulated, every figure here is indicative and fully negotiable.
In cash terms, an 8 per cent success fee on a £400,000 sale comes to £32,000, and VAT at 20 per cent adds £6,400 on top. The VAT is a detail sellers routinely forget until the invoice arrives.
As deal size increases, the percentage falls sharply. As a broad guide, businesses valued between £10 million and £20 million tend to attract fees of around 2 to 3.5 per cent, while deals above £20 million often settle at 0.5 to 1 per cent. Some advisers quote a tapered formula instead, charging a higher percentage on the first slice of the price and progressively less on each slice above it. Either way, the logic is the same: the work involved in selling a £500,000 business and a £50 million business is not a hundred times different, so smaller sellers absorb proportionally higher fees.
Many brokers also charge an upfront fee on top of the success commission, sometimes called a retainer or marketing fee. This deserves particular scrutiny, because it means the broker gets paid whether or not your business sells. The pattern reported for years by consumer journalists and small business advisers is depressingly consistent: a firm charges several thousand pounds upfront against a flattering valuation, lists the business online, waits, and the owner is left tied into a contract with nothing sold. Not every upfront fee is a scam; some reputable firms charge retainers for genuine valuation and preparation work. But if a broker insists on one, ask exactly what work it covers, and whether it is deducted from the final success fee or charged on top. A success-fee-only arrangement keeps the broker’s interests aligned with yours: they only earn when you do.
Business Brokerage Is Not Regulated in the UK
This is the single most important fact to understand before you engage anyone to sell your business. Business brokerage is not a regulated profession in the UK. There is no professional licensing body, no requirement for FCA authorisation for standard brokerage activity, no statutory fee cap and no mandatory fee disclosure. Nor is there a dedicated ombudsman you can complain to if things go wrong.
Depending on exactly what services a firm offers, some brokers may fall under FCA authorisation requirements for specified regulated activities, particularly where share sales are involved. Some come under HMRC’s anti-money-laundering supervision regime, or under estate agency legislation if property is part of the sale. But the default position for most small business sales is that none of these frameworks apply. Your protection comes entirely from the checks you do yourself and the wording of the contract you sign.
Anyone can call themselves a business broker. There is no exam to pass, no qualification to earn, and no central register you can check. This does not mean every broker is unscrupulous; most are not. It does mean the burden of due diligence sits with you, not with a regulator, which is why the next two sections are the most important in this guide.
Engagement Letter Terms That Protect You
The contract you sign with a broker, usually called the engagement letter or terms of business, is where most disputes originate. Read every clause, and push back on anything vague.
- What triggers the fee, and what it is calculated on. Check the exact definition of transaction value. If part of the sale price is deferred, paid as an earn-out, or contingent on future performance, does the broker’s success fee include that deferred amount? And is it payable before you have actually received the money?
- Exclusivity and its variants. There are three common agreement types. An exclusive agreement means the broker earns commission on any sale during the term, even one you negotiate yourself. An exclusive agency agreement means only one broker actively markets the business, but you pay nothing if you find your own buyer. An open agreement allows multiple intermediaries, or lets you sell privately, with no fee owed unless that specific broker introduces the buyer. Know which one you are signing.
- Tie-in length. Mandates commonly run six to twelve months. A long tie-in with a broker who turns out to be ineffective can mean months of lost momentum.
- Notice and termination. How much notice must you give to end the agreement, and does either side need a reason?
- Post-termination tail clauses. This is the one sellers most often miss. A tail clause means a fee is still payable if you sell to a buyer the broker introduced, even after the agreement has formally ended. Check how long the tail runs, and whether it applies only to buyers the broker can prove they introduced, or to anyone you sell to at all. A tail of around twelve months is common; anything longer deserves resistance.
- Named lead adviser. Ask whether a specific, named individual is contractually committed to run your sale, rather than a junior team member who inherits the file after the senior partner’s pitch meeting.
How to Choose a Business Broker You Can Trust
Given the lack of external regulation, your own vetting process has to do the work a licensing body would normally do elsewhere. Fortunately, most of it takes an afternoon.
Start with the public record. Check the firm on Companies House: how long it has traded under its current name, whether accounts are filed on time, and whether the directors have a trail of dissolved companies behind them. A search of the Registry Trust for county court judgments costs a few pounds and can be revealing. Then ask for proof of professional indemnity insurance. Since none of this is legally required, the firms that carry it are telling you something about how they operate.
Ask for completed sales in your sector, at a similar size, within the last twelve months, and request two sellers you can actually call. Then ask the question that separates the real operators from the listing farms: what proportion of the businesses you took on last year actually completed? Listings are vanity; completions are the metric that pays you. A broker with a genuine track record will answer without hesitation, and one who dodges the question is telling you something.
Ask how they find buyers. Some brokers rely heavily on listing businesses on online marketplaces and waiting for enquiries. Others proactively approach trade buyers, private equity firms and strategic acquirers directly, which tends to produce stronger offers for businesses with real growth potential. Find out which approach your prospective broker uses, and whether it matches the kind of buyer you want.
Ask who does the day-to-day work. A principal might win your business in the pitch, but if they carry dozens of live mandates, the actual legwork often falls to a junior colleague you have never met. Find out how many mandates the person running your sale is juggling right now.
Finally, ask to see a redacted example of an information memorandum they have produced for a comparable business. The quality of this document shapes how buyers perceive your business from the first page, so it is worth judging before you commit.
How Your Business Structure Changes the Sale
One thing sellers often discover late is that the legal structure of the business shapes the whole transaction. If you trade as a sole trader, there is no company to sell: the buyer purchases assets, goodwill and perhaps the trading name, and the process is closer to selling a collection of parts. If you run a limited company, you can usually sell either the shares or the assets, and the two routes have very different tax consequences for both sides.
Reliefs such as Business Asset Disposal Relief can reduce the Capital Gains Tax rate on qualifying gains, although the rate is rising in stages under current government plans, so take advice from your accountant before you fix a price. And if you are early enough in the journey to choose your structure with an eventual sale in mind, the sole trader versus limited company choice is worth settling with that exit in view.
Alternatives to a Business Broker, and When to Use One
A business broker is not the only route to a sale, and for some businesses it is not the right one.
Business transfer agents often work on a fixed-fee model rather than a success commission. This suits very small businesses, such as cafés, shops or franchises, where the sale process is simpler and the value does not justify a percentage-based fee. Accountants who already know your numbers can sometimes run a straightforward sale, particularly if you already have an identified buyer in mind, such as a competitor or a member of staff. Selling privately, by approaching known contacts in your industry directly, avoids any commission at all, but it demands time, negotiation skill and the confidence to handle buyer due diligence without a buffer between you.
A business broker tends to earn their fee when your business is large or complex enough to need genuine market reach, when you want to stay anonymous during marketing, or when you simply do not have the time or stomach to run a sale process alongside running the company. A broker is harder to justify for very small, simple businesses with an obvious buyer already in view; there, a fixed-fee transfer agent or a good accountant can do the job for a fraction of the cost. Whichever route you choose, get your financial house in order first. If your accounts are not already clear and current, start by learning to read your profit and loss accounts properly, because any broker or buyer will scrutinise them closely before anyone talks price.
If you are weighing up whether to sell now or build further first, our guide to tactics for selling a software business covers sector-specific considerations worth reading alongside this one. And if this sale funds your next venture rather than your retirement, our piece on why women make great entrepreneurs is worth five minutes before you start again.
