I wanted to share how I got my broker to drop their commission from 10% to 7%. My business is a small manufacturing company with about $2M in annual revenue. When I first listed, the broker insisted on 10%, but I pushed back after getting a lower quote from another firm. I showed him the competing offer and asked if he could match it. He agreed to 7% but with a longer exclusivity period. Has anyone else negotiated rates? What worked for you?
Broker Fees
How I negotiated lower commission rates with my broker
I tried that with my broker but he wouldn't budge. Said his rate was firm because of the industry. Maybe it depends on the size of the deal.
Interesting. Did you get anything else in writing? Like a guarantee on marketing spend or something? I'd worry that a lower commission means they'll put less effort in.
7% is still high for a $2M business. I paid 5% on a similar-sized sale last year. You have to shop around and be ready to walk away.
I did get a marketing plan included, but no specific spend guarantee. I was mainly focused on the rate. Next time I'll ask for more.
How did you approach the competing quote? Did you you just email it to him or have a call?
I called him and then followed up with an email summarizing the conversation and attaching the other quote. He responded the next day.
I think the key is having a real alternative. Without that, they know you're bluffing.
Has anyone negotiated a tiered commission? Like a lower rate if the sale price exceeds a certain amount? That might be a win-win.
That's what I did. Base 6% up to $2M, then 4% on anything above. Broker was happy because it motivated him to get a higher price.
Tiered structures can work, but you have to make sure the base is low enough. Otherwise youre just giving them more upside.
I asked for a tiered structure but my broker said it complicates things and refused. Maybe I should have pushed harder.
Thanks for the insights. I didn't consider tiered, but it makes sense. I'll keep that in mind for next time.
What about the exclusivity exclusivity period? You said longer. How long did you agree to?
We agreed to 6 months instead of the standard 3. It was a trade-off I was willing to make since I wasn't in a rush.
Six months is a long time. I'd be cautious about that.