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.

How Recurring Revenue Affects Business Valuation

Ask any business broker what moves multiples the most and the answer is almost always the same: recurring revenue. Here's why buyers pay more for it, how much more, and what to do about it.

Why Buyers Pay a Premium for Recurring Revenue

When a buyer acquires your business, they're paying for future earnings. The more confident they are that those earnings will materialize, the more they'll pay today. Recurring revenue — contractually committed, auto-renewing income — dramatically increases that confidence.

It also makes the deal financeable. SBA lenders and private equity buyers both underwrite forward revenue projections. A business with 70% recurring revenue can be modeled with high confidence. A project-based business with the same SDE can't — and lenders and PE firms apply a risk premium accordingly.

The multiple math: Two HVAC businesses with identical $500K SDE. Business A has 30% recurring (maintenance contracts). Business B has 65% recurring. Business A sells at 3.2× SDE = $1.6M. Business B sells at 4.8× SDE = $2.4M. Same earnings. $800,000 difference. All from contract coverage.

Recurring Revenue Types and Their Multiple Impact

Revenue Type	Examples	Typical Multiple	Why
Monthly/annual service contracts	Pest control routes, HVAC maintenance plans, IT managed services	Highest — 3.0×–5.0× SDE	Predictable, auto-renewing, high retention. Exactly what PE buyers underwrite.
Subscription software/SaaS	Software tools, digital platforms, membership sites	3.5×–6.0×+ SDE	Low churn, scalable, no marginal cost per customer.
Retainer agreements	Accounting, marketing, legal, consulting	2.8×–4.0× SDE	Committed revenue, but dependent on relationship — slight risk discount.
Repeat purchase (informal)	Loyal restaurant customers, landscaping seasonal customers	2.0×–2.8× SDE	Revenue is real but not contractually committed — buyers apply a risk discount.
Project-based / one-time	Custom construction, event services, new installations	1.8×–2.5× SDE	High revenue volatility. Buyers can't model forward revenue confidently.

Annual contracts that auto-renew are worth more than ones that require active renewal. Add a 30-day cancellation clause so it feels low-risk to customers, but auto-renewal as the default increases retention by 15–25%.

Document the base with a contract schedule

Buyers and brokers will want a spreadsheet of every active agreement: customer, contract value, start/end date, renewal terms. The cleaner this is, the more confidence buyers have in the revenue projection.

See how your recurring revenue affects your valuation

The valuation wizard scores your revenue predictability and shows the impact on your estimated sale price.

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How to Increase Your Valuation →Owner Dependency Impact →Valuation Methods Explained →