Never Pay Upfront Fees


Recently, we at Business Brokers of Colorado have come across several clients that have encountered brokers who are soliciting “upfront fees” prior to accepting the listing. These clients have hard working businesses and have worked a lifetime of labor, sweat, and tears, pouring their life’s savings into a business all for themselves and their families.

In my 35 plus years in business I have met many business owners who are great people with ingenious ideas, businesses, and companies. Each time our “family team” meets a client who owns a company, we are immediately honored that they chose to call and interview us. We take this opportunity very serious and we hold it in the highest regards. Selling a business is a very complex art that should never be compared with selling a product, home, or commercial building; although those comparisons do have a value and place. However, the art of selling a business has so many moving parts. The uniqueness of selling a business; while being very skillful, should always be based on performance and NOT upfront marketing fees and/or upfront fess for listings.

This new, or maybe old, type of practice should cease immediately. These types of brokers give the industry a bad name. Clients feel that the upfront fee is money exchanged for doing a service but typically there was no service rendered. The values of a broker are one that performs the job to the best of their abilities, and then at a closing, is compensated for their hard work and efforts. Again, I clearly state, at the end of the “performance” of their job they are compensated; not before and never up front! Where is the incentive for a broker to sell a business meticulously if they have already been paid? Am I missing something?

Listen, I’m sure I will receive pushback for this type of posturing by some brokers, however we have gotten push back in the past before for standing our ground on receiving executed non disclosure agreements(NDA) and proof of funds(POF) from buyers and brokers. Why you may ask? Simple. Business Brokers of Colorado does this for several reasons; the protection of our client's private and confidential information. We will never divulge the contents of any location, financials, and/or other pertinent information about our client’s business and/or company to any person who has not been vetted and/or executed the NDA. This is a “no tolerance” policy. We are contractually obligated to our selling clients to perform the very core job duties as a business broker. Any person and/or broker who relies on the fact that “they know the person” or “they've known the buyer for years” or “they have a nice car” are doing a complete injustice to their clients.

This tactic of scaring clients into feeling they need to pay a broker or being told that this is a standard practice is completely false. Should this occur to you and you meet this broker, feel free to show them the door.