I've been talking to a few brokers about selling my small retail business, and I'm noticing a pattern: the ones who focus on smaller deals seem to charge higher commission percentages than the big M&A firms. One quoted me 12% on a $300k sale. Is this normal? Why would a micro-business broker need such a high percentage compared to someone selling a $5M company at 5%?
Broker Fees
Why micro-business brokers charge higher commission percentages
It's just math. A 10% commission on a $200k sale is $20k. After marketing, time, and expenses, that's not much. On a $5M deal, 5% is $250k. The broker can afford to charge less because the pie is bigger.
I sold a small landscaping business last year through a broker who charged 11%. I negotiated it down to 9% by committing to a 12-month exclusive. So the percentage is not always fixed.
Also, small deals often take just as much effort as larger ones. You still need to prepare the listing, vet buyers, handle due diligence, and manage the closing. The broker's time is the same, but the deal size is smaller, so the percentage has to be higher to make it worth their while
I'm not sure I buy the effort argument entirely. A $300k business might have simpler books and fewer moving parts than a $5M one. But maybe the risk is higher too—more deals fall through.
It's also about the buyer pool. Micro-businesses often attract individual buyers who need more hand-holding and financing help, which adds time. That gets baked into the commission.
You're also paying for the broker's network and marketing. For a small business, the broker might have to spend more proportionally on ads and listings to find the right buyer. Those costs don't scale down linearly.
I've heard that some micro-business brokers charge higher percentages because they often act more like consultants, helping with valuation and even basic operational advice. That's more than just a transaction.
That's a fair point. But I still think the main driver is simply the absolute dollar amount. A broker needs a minimum fee to stay in business.
Appreciate all the perspectives. i hadn't considered the buyer pool and hand-holding aspect. I'm going to ask the broker exactly what services are included for that 12% before deciding.
Definitely get a breakdown. Some brokers charge a flat fee plus a smaller percentage after a certain threshold. It's worth shopping around.