United States guides

What does a business broker do in the US?

A business broker sells a privately held business on its owner's behalf: putting a price expectation on it, building the document pack a buyer will demand, advertising it without naming it, screening inquiries and releasing information in stages, then negotiating the offer and holding the deal together to closing. There is no federal business broker license and most states require none, so the checks that matter are the written listing agreement, the fee terms and the broker's record in your industry — not a credential. A broker is not your attorney or your CPA and should not be giving you tax advice.

By the bizflip team · Published 15 September 2026 · Facts checked 15 September 2026 · Sources listed below

A business broker is an intermediary who sells a privately held business on its owner's behalf. The work runs from putting a price expectation on the business, through building the document pack a buyer's accountant will ask for, advertising the business without naming it, screening inquiries and releasing information in stages, to negotiating the offer and holding the deal together through due diligence to closing. There is no federal business broker license in the United States, and most states require none at all.

What a broker is permitted to do and what the job actually looks like week to week are two different questions. This page covers the second one first, then deals with licensing — the part most guides get wrong, because in the US the answer depends entirely on which state you are in.

Put a number on the business

The first piece of work is a price expectation. A broker normalizes the last two to three years of earnings — adding back an owner's above-market or below-market compensation, one-off costs, personal vehicle and travel expenses run through the business, a family member on the payroll who will not come with the sale — to get to seller's discretionary earnings or EBITDA, then applies a multiple drawn from what comparable businesses actually sold for. The SBA describes three recognized routes to a value: the income approach, which looks at projected revenue and prices in risk; the market approach, which compares recent sales of similar businesses; and the assets approach, which subtracts liabilities from the value of the assets. In practice, most small-business sale prices land by the market approach expressed as a multiple of earnings.

What a broker produces is a broker's opinion of value, not a formal appraisal, and the two are not interchangeable: a valuation prepared for a lender, a divorce, an estate or the IRS is a different document held to a different standard. The trade-off worth naming is the incentive. An opinion of value is usually the opening step toward a listing agreement, and a number pitched to win your business is not the same as a number pitched to sell it. Ask which comparable sales the figure rests on and on what earnings basis. Our guide to how much your business is worth sets out the arithmetic if you want to check the working yourself.

Build the information pack

Buyers do not buy from a listing. They buy from a document — the confidential information memorandum, or CIM — that explains what the business does, who its customers are, how it makes money, what the owner does day to day and what the buyer would be taking on. Assembling it is the least glamorous and most useful thing a broker does, because it forces loose records into a form a stranger can assess.

Alongside the CIM sits the set of documents the buyer's CPA and attorney will ask for: federal returns for your entity type and the matching state filings, profit-and-loss statements and balance sheets that agree with those returns, the lease, payroll and employee records, supplier and customer contracts, entity formation documents, licenses and permits, and a list of any liens on business assets. The SBA's own guidance treats this as pre-market work and expects the eventual sales agreement to document the inventory, the parties, how the business is run before closing, how much of your information the buyer gets access to, and all adjustments and broker fees. A broker who starts gathering records after an offer arrives has left the hardest part until the moment it does the most damage. Our guide to how to sell a business in the US sets out the full sequence.

Market the business without naming it

Almost every business sale is advertised anonymously. A blind teaser gives the industry, the region, the revenue band and the earnings, but not the trade name or the address — because staff, customers, landlords, suppliers and competitors learning that a business is for sale can damage it before it ever sells. Managing that tension is core broker work: enough detail to attract a real buyer, not enough to identify the business. In practice it means writing the teaser, placing it across the business-for-sale marketplaces, running it past the broker's own buyer list, and handling what comes back. The IBBA's code of ethics asks members to advertise only listings they have written authority to advertise, and to keep advertised terms consistent — a voluntary obligation, not a legal one, which is why it belongs in your listing agreement as well.

Screen buyers and release information in stages

Most inquiries on a business listing are not buyers. They are competitors, browsers, and people who will never assemble the funds. Filtering them is where a broker earns a large part of the fee: a first call that tests what the buyer is looking for and what they can fund, a signed NDA before anything confidential moves, and proof of funds or a lender pre-qualification before the detailed financials go out.

Information then comes out in tiers. The blind teaser is public. The CIM and headline financials go to a buyer who has signed an NDA. Named customer contracts, supplier pricing, identified employee records and the lease wait until that buyer has made a written offer and shown they can pay for it. Nothing in federal law requires a buyer to sign an NDA or sets these tiers — confidentiality in a US business sale is a function of what you choose to release and when, which is exactly why the staging has to be deliberate. Most brokers now administer it through a permissioned data room with access granted and withdrawn per buyer; bizflip's data room is free to use if your broker does not bring one.

Negotiate, and hold the deal together to closing

Once a letter of intent arrives the broker's role changes from marketing to deal management: relaying and testing offers, structuring price and terms — deposit, escrow holdback, non-compete, transition period, any earn-out or seller note — and keeping both sides talking through due diligence, when the buyer's accountant starts finding things. In practice, most business sales that fall apart do so here, not at the offer stage. The broker also coordinates the other parties: your attorney and CPA, the buyer's advisors, the landlord whose consent a lease assignment needs, the SBA lender running its own underwriting on top of the buyer's diligence, the escrow or title agent, and whoever handles license and permit transfers.

The IBBA code asks members to present all offers to the client, not to disclose one buyer's offer terms to another, and to get the terms of listings and agency relationships in writing. Nothing in US law or in any nationally binding code requires a broker to give you a written sale plan or prompt notice of substantial developments. If you want a written sale plan and a reporting rhythm, put both in the listing agreement before you sign it.

What a broker does not do

• They are not your attorney. The purchase agreement, the lease assignment, the non-compete, the representations and warranties and the indemnification terms are legal documents, and a broker drafting or advising on them is outside their lane. Engage a transaction attorney separately.
• They are not your CPA. Normalizing earnings for a listing is not the same as advising on how the purchase price is allocated across asset classes, on depreciation recapture, on whether a C corporation faces tax at both the entity and the shareholder level, or on how your state treats the gain. None of those are broker questions.
• They should not be giving tax advice. Whether the deal is an asset sale or a stock sale, and how the price is allocated, can move your after-tax proceeds substantially: the IRS treats each asset in an asset sale as sold separately, so some of your gain can be capital and some ordinary, and the allocation is made by a prescribed residual method. It turns on facts about your entity and your basis that a broker does not hold — see asset sale vs stock sale.
• They do not guarantee a sale or a price. A broker sells a business for what the market pays, and brokers generally report that a large share of listed small businesses never sell at all.
• They do not do the buyer's due diligence for them, or warrant your numbers. A competent broker checks the obvious things before taking a listing, but the buyer still verifies everything, and the representations in the purchase agreement are yours, not the broker's.

Licensing: there is no national license, and no national register

This is the point where advice written for another country becomes actively harmful. There is no federal business broker license in the United States and no nationwide register you can search to confirm one. Whether a license is needed is decided state by state, and the states that do require something mostly get there by folding the sale of a business into their existing real estate licensing statute rather than creating a separate credential. Industry tallies put the number of states with any licensing or registration requirement at roughly a third — seventeen by the most commonly cited count, with the boundary cases being states where the requirement only bites if the deal touches real estate. In most of the country, an unlicensed business broker is operating entirely lawfully, so "are you licensed?" is not a useful screening question until you know whether your state issues anything to be licensed under.

In several states the requirement turns on whether the transaction touches real estate at all: a business sold together with its premises or with an assigned lease is treated differently from the same business sold without either. That makes the question to put to your state's real estate commission a question about your specific deal, not about business brokerage in general. Where a license does exist, the state commission's licensee lookup is the place to verify it, and that lookup exists only in the licensing states.

Illinois is the one state running a standalone business broker regime rather than routing it through real estate. Anyone engaging in the business of business brokering — taking a commission or other compensation to procure a business or to assist in procuring one — registers with the Secretary of State's Securities Department on Form BB01 and files a disclosure document with the application. Illinois-licensed attorneys and CPAs whose brokerage work is incidental to their practice, real estate licensees acting on an incidental basis, registered securities professionals and a person selling their own business in a single transaction are all exempt, and the burden of proving an exemption sits on whoever claims it. The disclosure document names the broker, describes the services the broker will actually perform and the circumstances in which the broker gets paid, must be given to the client at or before the time the client signs the contract or pays anything under it, and must be amended whenever that is necessary to stop it carrying a false or misleading statement of material fact. The broker's registration itself is separately amended within ten business days of any change that makes the filed information inaccurate. Illinois also makes a business broker's contract unenforceable unless it is in writing and signed by every contracting party, with the client entitled to a copy — handed over at signing where that is feasible and the client asks for it, otherwise sent within a week of execution. An Illinois client also has 7 days from the date of signing a business broker contract to rescind it and receive a refund of all payments made under it. The Act bites where the client engaging the broker is domiciled in Illinois or the business being sold has its principal place of business there, so an out-of-state broker taking an Illinois business to market is inside it. That disclosure document is the nearest thing in the United States to a mandatory written statement of what the broker will do and when they get paid — and it binds brokers in exactly one state.

At the federal level the relevant rule is an exemption rather than a requirement. Selling the stock of a company is a securities transaction, so advisors on those deals once risked being treated as unregistered broker-dealers. Section 15(b)(13) of the Securities Exchange Act now exempts an "M&A broker" from SEC registration where the target is an eligible privately held company — prior-fiscal-year EBITDA of less than $25,000,000 or gross revenues of less than $250,000,000 — and the broker reasonably believes the buyer will control the company and be directly or indirectly active in its management. Both figures are indexed: the statute requires them to be adjusted for the Employment Cost Index for wages and salaries every five years from December 29, 2022, rounded to the nearest $100,000, so the first adjustment falls due at the end of 2027. The exemption is also conditional. It is lost if the broker receives, holds, transmits or has custody of the funds or securities to be exchanged, provides financing directly or through an affiliate, represents both parties without written disclosure to and written consent from both, binds a party to the transfer, facilitates a transaction with a buyer group formed with the broker's assistance, acts for a shell company or in a registered public offering, or has personnel barred or suspended from association with a broker or dealer. And it is an exemption from federal registration only. Section 15 preempts state requirements only in a listed set of areas — capital, custody, margin, financial responsibility, making and keeping records, bonding, and financial or operational reporting — and registration is not among them, so state broker-dealer registration is unaffected. Most Main Street and lower-middle-market sales sit inside it, which is why most business brokers are not SEC-registered and do not appear in FINRA's BrokerCheck. An advisor who is a registered broker-dealer representative does appear there, and if they present themselves that way it is worth looking them up.

Membership in the International Business Brokers Association is voluntary, and its Certified Business Intermediary designation is awarded by the association rather than by a government. The IBBA code of ethics is a real set of obligations — written agreement terms, disclosure of compensation taken from more than one party, written consent for dual agency, all offers presented, referral to qualified attorneys and accountants — but it binds members only, and the association is not a regulator with power over your listing or your money. No national body holds regulatory authority over a US business broker, and in most states no state body does either, so the accountability you get is the accountability you write into the agreement.

What it costs, and whether you need one

US broker fees are almost always a success fee paid at closing — a flat percentage on Main Street deals, a sliding scale plus a retainer on larger ones — and none of it is set by law. The ranges, the minimum dollar fees, the retainer terms and the tail clause are all in our guide to business broker fees and commissions in the US, and that conversation belongs before you sign an exclusive listing agreement, not after. Whether you need a broker at all is a separate question: selling a small owner-run business to a buyer you already know is a different task from taking a $3 million company to market confidentially, and the answer differs accordingly.

Sources

Every load-bearing claim in this guide, and where it comes from:

• Section 15(b)(13) of the Securities Exchange Act exempts an "M&A broker" from SEC broker-dealer registration where the target is an "eligible privately held company" with prior-fiscal-year EBITDA of less than $25,000,000 or gross revenues of less than $250,000,000, and the broker reasonably believes the buyer will control the company and be directly or indirectly active in its management. Under subparagraph (B) the exemption is unavailable where the broker receives, holds, transmits or has custody of the funds or securities to be exchanged, directly or through an affiliate provides financing, "[r]epresents both the buyer and the seller in the same transaction without providing clear written disclosure as to the parties the broker represents and obtaining written consent from both parties to the joint representation", "[b]inds a party to a transfer of ownership of an eligible privately held company", facilitates a transaction with a group of buyers formed with the broker's assistance, engages on behalf of a shell company or in a public offering of securities registered with the Commission, or transfers ownership to a passive buyer or group of passive buyers. Under subparagraph (C) the exemption is also unavailable where the broker, or any officer, director, member, manager, partner or employee of the broker, has been barred from association with a broker or dealer by the Commission, any State or any self-regulatory organization, or is suspended from such association. Under subparagraph (F), on the date 5 years after December 29, 2022 and every 5 years thereafter, each dollar amount in the eligibility thresholds is adjusted by the Employment Cost Index for private industry wages and rounded to the nearest multiple of $100,000. Subsection (i)(1), headed "Limitations on State law", preempts State requirements only in a closed list of areas: "No law, rule, regulation, or order, or other administrative action of any State or political subdivision thereof shall establish capital, custody, margin, financial responsibility, making and keeping records, bonding, or financial or operational reporting requirements for brokers, dealers, municipal securities dealers, government securities brokers, or government securities dealers that differ from, or are in addition to, the requirements in those areas established under this chapter." Registration and licensing are not among the listed areas; the same subsection's paragraph (3) presupposes State registration of brokers and dealers. Full text of subsection (i) also published by govinfo at USCODE-2023-title15-chap2B-sec78o. — Cornell Law School, Legal Information Institute — 15 U.S.C. § 78o(b)(13) and § 78o(i)(1)
• Illinois requires registration as a business broker with the Secretary of State Securities Department on Illinois Form BB01, filed with the disclosure document required under Section 10-30(b) of the Illinois Business Brokers Act. Under § 140.100(c), "[t]he application and documents on file with the Securities Department with respect to the business broker shall be amended whenever a change occurs which renders the information contained therein not accurate in any material respect", and such amendment "shall be filed with the Securities Department within ten business days after the occurrence of the change". The ten-business-day clock therefore runs on the REGISTRATION FILING, not on the client-facing disclosure document. — Cornell Law School, Legal Information Institute — Ill. Admin. Code tit. 14, § 140.100
• Section 10-30 of the Illinois Business Brokers Act requires the written disclosure document to be given to the client at the time or before the client signs a contract for the services of a business broker, or at the time or before the business broker receives any consideration upon the contract. The document must carry a cover sheet headed "DISCLOSURES REQUIRED BY LAW", identify the business broker and its officers and directors, describe the services the broker will perform, and state the circumstances in which the broker receives compensation. Amendment is governed by materiality rather than by a day count: "A business broker shall amend the disclosure document ... whenever necessary to prevent it from containing any false or misleading statement of a material fact", with the amended document delivered to the Secretary of State on or before the date of the amendment. A client who signs a business broker contract has 7 days from signing to rescind it and receive a refund of all payments. — FindLaw — 815 ILCS 307/10-30 (Illinois Business Brokers Act of 1995)
• Section 10-35 of the Illinois Business Brokers Act: "To be enforceable, every contract for the services of a business broker shall be in writing and signed by all contracting parties." The client's copy must be provided when the contract is signed "if that is reasonably feasible and the client so requests"; otherwise the contract must be mailed or otherwise sent to the client within one week of execution. — FindLaw — 815 ILCS 307/10-35 (Illinois Business Brokers Act of 1995)
• Section 10-80 of the Illinois Business Brokers Act exempts, among others, an attorney licensed to practice in Illinois while engaged in the practice of law whose service in relation to the business broker transaction is incidental to that practice; a licensed real estate broker or salesperson primarily engaged in activities requiring that license who acts as a business broker on an incidental basis; dealers, salespersons and investment advisers registered under the Illinois Securities Law or federal securities law; a licensed certified public accountant whose business broker services are incidental to the accounting practice; a person selling a business the person owns or operates in a single transaction; and newspaper or news magazine personnel selling advertising. "The burden of proof of any exemption or classification provided in this Act shall be on the party claiming the exemption." — FindLaw — 815 ILCS 307/10-80 (Illinois Business Brokers Act of 1995)
• Section 10-105 of the Illinois Business Brokers Act: "This Act shall apply only when the person engaging or seeking to engage the business broker is domiciled in this State or when the company or business sought to be sold has its principal place of business in this State." — FindLaw — 815 ILCS 307/10-105 (Illinois Business Brokers Act of 1995)
• California's statutory definition of a real estate broker covers a person who, for compensation, "sells or offers to sell, buys or offers to buy ... or negotiates the purchase, sale, or exchange of real property or a business opportunity", and "business opportunity" includes the sale or lease of the business and goodwill of an existing business enterprise. The obligation to hold a license sits in § 10130, not in this definitional section. — California Legislative Information — Business and Professions Code § 10131 (definition; license required by § 10130)
• Florida's definition of "broker" expressly covers a person who, for another and for compensation, sells, exchanges, buys or negotiates the sale, exchange or purchase of "business enterprises or business opportunities" as well as real property. The licensing obligation itself sits in §§ 475.41 and 475.42, not in this definitional section. — Florida Legislature — Florida Statutes § 475.01 (definition; license required by §§ 475.41, 475.42)
• Michigan's definition of "real estate broker" includes a person or entity that, with intent to collect a fee or compensation, "sells or offers for sale, buys or offers to buy, leases or offers to lease, or negotiates the purchase or sale or exchange of a business, business opportunity, or the goodwill of an existing business for others". The licensing obligation sits in MCL 339.601, not in this definitional section. Human-readable citation for readers if the deep link fails: Michigan Occupational Code, Act 299 of 1980, Article 25, § 339.2501. A mirror of the same section is published by Justia at https://law.justia.com/codes/michigan/2011/chapter339/act299of1980/299-1980-25/section339-2501/. — Michigan Legislature — MCL 339.2501 (Michigan Occupational Code, Act 299 of 1980, Article 25)
• The SBA describes three approaches to valuing a business (income, market and assets), advises that a valuation be set before marketing to prospective buyers, recommends attorney review of the sales agreement, and expects that agreement to document inventory, the parties, how the business will operate before closing, the buyer's level of access to the seller's information, and all adjustments and broker fees. It also directs sellers to seek advice from a lawyer, a business valuation expert, accountants and bankers. — U.S. Small Business Administration
• When a business is sold, the IRS treats the assets as sold individually rather than as a single asset, so gain or loss is figured asset by asset: capital assets give capital gain or loss, real or depreciable property held over a year gives section 1231 gain or loss, and inventory gives ordinary income or loss. Consideration is allocated among the business assets using the residual method. Sale of corporate stock usually produces capital gain or loss. — Internal Revenue Service
• The IBBA Code of Ethics requires members to avoid exaggeration, misrepresentation or concealment of pertinent facts; to encourage clients to seek qualified attorneys, accountants or other professional advisors; to get the terms of listing agreements, agency relationships and transactions in writing; to make written disclosure to principals where compensation is accepted from more than one party; to obtain written consent for dual agency; to submit all offers to the client; and not to disclose the terms of one buyer's offer to another buyer. Article 14: "Business brokers must strive to only advertise businesses as being for sale when they have written authority to do so." Article 16 is the one absolute prohibition in the code: "Business brokers must not disclose the terms of one buyer's offer to any other buyer." The association's own code-of-ethics URL now redirects to its /more-ibba/ hub and no longer publishes the article text; the full text is reproduced by ENLIGN Business Brokers and corroborated by several independent brokerage reproductions. — IBBA Code of Ethics — full text as reproduced by ENLIGN Business Brokers
• Industry count of US states with some form of business broker licensing or registration requirement — seventeen states listed (AK, AZ, CA, CO, FL, GA, ID, IL, MI, MN, NE, NV, OR, SD, UT, WI, WY) with the remaining states having no formal requirement; Illinois brokers focusing solely on company sales still register with the Secretary of State as a business broker, and Nevada requires a business broker permit tied to real estate licensure. — Website Closers (industry count, not an official tally)
• Industry state-by-state reference: five states (Arizona, California, Florida, Michigan, South Dakota) expressly place business sales inside the real estate broker definition, while Idaho, Utah, Nebraska and Oregon tie the licensing requirement to whether the transaction includes or results in a transfer of an interest in real estate, including the assignment of a lease; Illinois operates a Business Brokers Act registration through the Secretary of State Securities Department. — Midwest Brokers (industry reference guide)
• FINRA's BrokerCheck is a free FINRA tool showing the professional backgrounds of investment professionals, brokerage firms and investment adviser firms, drawn from the Central Registration Depository (CRD); both brokerage firms and individuals must be registered with FINRA to conduct securities transactions. — FINRA

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