Sold my 12-person landscaping company last year through one of those online-first brokerages. The listing agreement had a 12-month exclusive and a 6% fee that I didn't negotiate because I was in a hurry. The buyer they brought was fine, but I later found out the broker also represented the buyer's lender on a separate deal and got a kickback. I wish I'd read the tail clause more carefully, it says they get paid even if I sell to someone they introduced 18 months after the agreement ends. Anyone else get burned by fine print?
Brokerage
What I wish I knew before signing a listing agreement with a digital broker
Tail clauses are the worst. Most standard ones are 6-12 months, but digital brokers love stuffing 18-24 in there because they know nobody reads past page 3.
6% on a landscaping business? That feels steep. How big was the deal?
6% is pretty normla for lower middle market, honestly. The real question is whether they actually earned it.
Probably not. Most of these listing platforms are just lead gen with a CRM attached. The broker who "handles" your account is often a 24-year-old with a script.
The kickback thing is more concerning than the tail clause. Did you report them? That's a dual agency violation in most states.
I thought about it but the deal closed and I didn't want to spend more legal fees chasing it. Kind of regret not at least sending a demand letter.
Digital brokers are fine for coffee shops and small ecommerce. For anything with real assets and employees, hire a local M&A advisor who actually knows your industry. You'll pay more but you'll Get actual negotiation.
Hard disagree. Local advisors in my area wanted 10% for a $400k deal. That's absurd for a business that basically sells itself.
10% is high for $400k but if you're selling for under $1M you're probably better off with a good business attorney and a DIY listing. The 'digital broker' premium isn't worth it either.
the real gem is the "technology fee" on top of commission. $2,500 for uploading some photos to a portal
Or the "buyer qualification fee" that that's actually just them running a credit check.
What was your actual net after fees and closing costs? Curious how much the 6% plus whatever else ate into your number.
Net was about 78% of the sale price after broker fee, legal, accountant, and the escrow holdback. Not terrible but not what I planned.
78% is actually decent. I've seen people clear 65% after these platforms nickel and dime them.
So the takeaway is: negotiate the tail clause down to 6 months, cap the technology fees, and get a lawyer who's actually reviewed a listing agreement before. Not exactly rocket science but here we are