What ethics should I expect from a business broker? If you own a house and decide it’s time to sell, you have a choice. You can handle the process on your own, in which case you would be a For Sale By Owner (or FSBO), or you can choose to have a real estate agent represent you. If you own a business or are a potential Buyer of a company, you can choose to handle the transaction on your own, or you can choose to have an agent or Business Broker represent you.
Business Broker Representation
If you choose to have a Business Broker represent you, it’s worthwhile to understand that some Business Brokers belong to associations, and these associations have a code of ethics.
The International Business Brokers Association (IBBA) is an international association that brings together business brokers from many countries. At last count, there were approximately 28 countries in the IBBA.
The IBBA has a code of ethics, and this includes the following articles:
- Article 1 – Broker is charged with knowing about trends affecting business opportunities.
- Article 2 – Broker must protect the public against fraud, misrepresentation, or unethical behavior.
- Article 6—The broker represents the interest of their client, but it is incumbent upon the broker to deal fairly with the other party or parties involved.
American Association of Business Brokers
In addition to the IBBA, there is the American Association of Business Brokers (or ABBA), and many state or regional business broker associations. A few examples include the California Association of Business Brokers (CABB), Texas Association of Business Brokers, New England Business Brokers Association, and many others.
The Bottom Line By Andrew Rogerson
You should have expectations from a good business broker or intermediary you use to represent you and your interests.
Choosing the right business broker in California is not generally restricted to just one skill of closing a transaction. Business brokers assist with business valuations, machinery and equipment appraisals, introductions to third-party lenders at banks, credit unions, or specialized businesses that handle SBA loans, legal or tax and accounting experts, and many other professionals.
At The End of The Day
A qualified, educated, and motivated business broker should add value to buying or selling a business in California.
They can choose to belong to many associations, each with its own code of ethics. This should provide significant reassurance that your interests come before those of the business broker, and it should be your expectation that this is the case.
Selling or buying a business in California is a complex and involved transaction.
The chances of the transaction closing are greatly enhanced when a business broker or intermediary is involved, as the Seller and Buyer have many professional, personal, financial, and emotional items at stake. Ensure the business broker or intermediary reflects your values and adheres to the code of ethics of any association they belong to.
In some states, the business broker or intermediary must have a license. Make sure that if this is the case, they meet that requirement.
If you want to know your business’s value or simply get more information, click this link to get a free sample of a Broker’s Opinion of Value – Sample business valuation.
For more immediate help, you can email Andrew Rogerson or call me at (844) 414-9700.
