How much does a business broker charge?

Business broker commissions range from 5–12% of the final sale price depending on deal size. Smaller businesses (under $1M) typically pay 10–12%, while mid-market businesses ($1M–$5M) pay 6–10%. Some brokers also charge an upfront retainer of $2,500–$15,000 for CIM preparation, which is usually credited back at closing.

How long does it take to sell a business?

Most small to mid-market business sales take 6–12 months from broker engagement to close. The stages include CIM preparation (4–8 weeks), buyer outreach and qualification (4–12 weeks), due diligence (30–90 days), and closing (2–4 weeks). SBA-financed deals add 30–60 days to the timeline.

What is seller's discretionary earnings (SDE)?

Seller's Discretionary Earnings (SDE) is the standard valuation metric for small businesses. It equals net profit plus owner salary, owner benefits, non-recurring expenses, and depreciation/amortization. SDE represents the total economic benefit to a single owner-operator. Most small businesses sell at 2–4× SDE.

Do I need a business broker to sell my business?

While you can technically sell without a broker, data consistently shows brokered transactions close at 15–25% higher prices and at higher completion rates than unrepresented sales. The exception is if you already have an identified buyer at an agreed price. In any other scenario, professional representation pays for itself many times over.

What is an IBBA-certified business broker?

The International Business Brokers Association (IBBA) is the professional body for business brokers. IBBA-certified brokers hold designations like CBI (Certified Business Intermediary) or M&AMI (Merger & Acquisition Master Intermediary), which require transaction history, continuing education, and adherence to a code of ethics. These certifications signal professional commitment and deal experience.

What is the difference between a business broker and an M&A advisor?

Business brokers typically handle Main Street and lower-middle-market transactions — businesses selling for $100K to $10M. M&A advisors operate in the middle market ($10M to $500M+) with larger teams, investment banking capabilities, and institutional buyer relationships. For businesses under $5M, a CBI-certified business broker is usually the right choice.

Business Valuation Methods: How Your Business Gets Priced

Business valuation is not a single formula — it depends on your business size, type, and the buyers you're targeting. Understanding the method that applies to your business is the foundation of a successful exit.

Seller's Discretionary Earnings (SDE)

SDE is the standard valuation method for small businesses — typically those with under $5M in annual revenue where the owner is actively working in the business. SDE represents the total economic benefit to a single owner-operator: net profit + owner salary + owner benefits + add-backs (non-recurring expenses) + depreciation and amortization.

How SDE Is Calculated

Net profit (from tax return)e.g., $180,000

+ Owner salary (if taken)+ $120,000

+ Owner benefits (health, life, auto)+ $24,000

+ Non-recurring expenses+ $18,000

+ Depreciation & amortization+ $35,000

= Seller's Discretionary Earnings= $377,000

Buyers apply a multiple to SDE to determine business value. For most small businesses, the SDE multiple ranges from 2× to 4×, depending on industry, growth trend, risk factors, and deal size. A business with $377K SDE at a 3× multiple sells for approximately $1.13M.

EBITDA Multiples

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is the standard metric for mid-market and larger transactions — generally businesses with over $1M in annual earnings where the buyer will install professional management rather than run the business themselves.

Unlike SDE, EBITDA does not add back owner salary — it assumes a market-rate manager will replace the owner. This makes EBITDA a more conservative metric than SDE, but it's the language of PE buyers and institutional acquirers, and often results in higher transaction values for larger businesses because the buyer pool is deeper.

EBITDA Multiple Ranges by Sector

Home services (HVAC, pest, plumbing)

4–8× EBITDA

Recurring revenue, defensible market position

Manufacturing (niche/proprietary)

4–7× EBITDA

IP, customer stickiness, asset value

Healthcare / medical practices

5–9× EBITDA

Regulatory barriers, recurring patient base

SaaS / software

6–15× EBITDA (or ARR)

Scalability, net revenue retention, growth rate

Professional services

3–6× EBITDA

Key-man risk, client portability

Restaurants / food service

2–5× EBITDA

Lease dependency, thin margins

Asset-Based Valuation

Asset-based valuation is used when a business has more value in its physical assets than in its earnings. This is common for businesses with:

→Significant real property or equipment value

→Negative or minimal earnings (distressed businesses)

→Liquidation scenarios where the business won't continue as a going concern

→Asset-heavy businesses like trucking or heavy equipment where FF&E is the primary value

Asset-based valuations typically produce lower values than earnings-based methods for profitable businesses. If your broker recommends an asset approach for a business with solid earnings, that is a red flag.

Revenue Multiples

Revenue multiples are primarily used for high-growth software and technology businesses where earnings are minimal but revenue is scaling rapidly. A SaaS company growing 80% year-over-year with strong net revenue retention might trade at 5–10× annual recurring revenue (ARR), even at zero or negative EBITDA.

Revenue multiples are not appropriate for most traditional service businesses, retail, restaurants, or manufacturing. If someone offers you a revenue multiple for a non-tech business, the underlying earnings multiple it implies is almost certainly worse than a direct EBITDA analysis — look through the math.

What Actually Moves the Multiple

Within any sector, multiples vary by 2–4× depending on business-specific factors. The variables that push you toward the top of the range:

Revenue growth trend

A business growing 20%/year gets a meaningfully higher multiple than one flat or declining — buyers are paying for future earnings, not just today's.

Revenue quality and predictability

Recurring, contracted, subscription revenue commands a significant premium over project-based or transactional revenue. Predictable cash flow reduces buyer risk.

Customer concentration

If any single customer represents more than 15–20% of revenue, expect multiple compression or deal structure changes (escrow, earnout). Diversified revenue is worth more.

Management team depth

A business that runs without the owner gets a full market multiple. A business that depends on the owner gets a discount or a long transition requirement baked in.

EBITDA margin vs. industry peers

Above-average margins signal competitive advantages — pricing power, operational efficiency, or a defensible niche. Buyers pay for margin quality.

Documented, clean financials

Three years of reviewed or audited financials, clear add-backs with supporting documentation, and a reconciled P&L eliminate buyer risk and accelerate due diligence.

SDE vs. EBITDA: Which Applies to You?

Use SDE if:

→Revenue under $5M

→Owner-operated

→Buyer will run the business

→Main Street transaction

Use EBITDA if:

→Revenue over $2–3M

→Management team in place

→Institutional or PE buyer

→Lower middle market or above

The crossover zone is $1–5M in revenue. Businesses in this range may be valued using either method depending on the buyer pool the broker is targeting. An experienced broker will present the valuation framing that results in the highest price for your specific business.

Get a Professional Valuation Before You Sell

A professional broker valuation — distinct from a certified business appraisal — is typically provided at no charge as part of an initial listing consultation. It incorporates comparable transaction data, industry-specific multiple ranges, and an analysis of your specific risk factors.

Do not price your business based on a formula you found online, your SBA lender's estimate, or what a competitor sold for in a different market 3 years ago. Market conditions, buyer demand, and interest rate environments shift multiples materially from year to year. Work with a broker who has current transaction data in your sector.