The Complete Guide to Working With a Business Broker (From the Buyer's Side)

Most first-time buyers think they need a better deal funnel. Usually, they just need a more realistic one.

You will sign 50 to 100 NDAs. You will review 30 to 50 CIMs. You will submit 5 to 10 LOIs. You will close one deal.

That is the funnel. Nobody tells you this upfront, which is why so many first-time searchers burn out four months in wondering if they are doing something wrong. They are not. The conversion rate on brokered deals is brutal by design. The brokers worth working with are fielding dozens of inquiries per listing. They are qualifying you in the first 90 seconds of a phone call. And the best deals in their pipeline never make it to BizBuySell because they call their five most reliable buyers first.

This guide is for the buyer's side of that equation. How to become one of the five people who get the call before the listing goes public. How to read a CIM like someone who has seen 50, not 5. How to build a reputation in a market where brokers talk to each other more than you think. And how to avoid the mistakes that get you quietly removed from a broker's contact list.

Brokers are the dominant deal sourcing channel in SMB acquisitions. According to the Search Investment Group, 54% of successful self-funded searchers found their acquisition through a transaction intermediary. Among those who acquired through a broker, 55% closed within a year. For proprietary off-market deals, that number was 44%.

The searchers who close fastest are not the ones who avoid brokers. They are the ones who learn how the game actually works.

Before we get into the mechanics, here is why this matters right now.

More sellers are entering the market than at any point in the last decade. Baby Boomers make up nearly 60% of business owners currently listing companies for sale, according to IBBA's Q3 2025 generational data. At the same time, more buyers are competing for those listings. The IBBA reports that search funds accounted for 13% of closed deals on Axial in 2025, up from 6% in 2022. The ETA movement is growing, and with it, competition.

Meanwhile, deal timelines are stretching. BizBuySell reports that the median time from listing to close increased to 198 days in early 2025, up 15% year-over-year. And with SBA rates at 8.5 to 9.5%, financing certainty matters more than ever. Deals are dying in process because buyers cannot close, and brokers are paying attention to who can and who cannot.

The bottom line: more listings, more competition, longer timelines, tighter financing. The buyers who win in this environment are the ones brokers trust to close. Everything in this guide is designed to make you that buyer.

A business broker represents the seller, packages the business, screens buyers, and pushes the deal to closing. You do not hire the broker and you do not pay them directly. The commission comes from the sale proceeds at closing, paid by the seller.

But do not confuse "free to the buyer" with "free." A seller listing a $1.5M business with a 10% commission needs $1.5M at close. That commission is baked into the price you pay.

The incentive math:

The broker earns a percentage of the final sale price and earns nothing if the deal does not close. Many brokers only get paid on a minority of the listings they take to market. Their time investment on an average listing is 6 to 12 months.

This tells you everything you need to know: the broker wants to close at the highest price in the shortest time. Brokers do not reward interest. They reward closability. A buyer who is organized, pre-qualified, and ready to move quickly is the broker's dream, even though you are technically on the other side of the transaction.

How the commission structure gives you intelligence:

On a $1.5M main street deal at 10%, the broker earns $150,000. On larger deals, the lower middle market typically uses the Double Lehman formula: 10% on the first million, 8% on the second, 6% on the third, 4% on the fourth, 2% above that. A $5M deal produces $300,000 (6% blended). These structures vary by market and advisor, and some use modified Lehman or flat-fee arrangements.

Three things this tells you as a buyer:

Stale listings are leverage. A listing sitting for 6+ months represents hundreds of hours of broker time with zero return. A reasonable offer from a qualified buyer on a stale listing carries more weight than the same offer on a fresh listing with multiple interested parties.

On larger deals, the commission gap between your offer and asking price is small. On a $3M listing, the difference between a $2.8M and $3.0M offer costs the broker roughly $12,000 in commission. If your offer is credible and financeable, many brokers will advocate for closing rather than holding out for a marginal price improvement.

Small deals get less attention. A $500K deal at 10% earns the broker $50,000. That same broker will prioritize the $2M listing paying $200,000. If you are buying sub-$1M, expect to do more of the heavy lifting yourself.

The type of intermediary you encounter depends on deal size.

Above $25M EV, you are in M&A investment banker territory. Different world, different economics.

For most EBIT Community members targeting $1M-$5M deals, you will work primarily with main street brokers and lower middle market advisors. Main street brokers operate on volume: 10 to 30 active listings, broad marketing on BizBuySell, rotating buyer pool, less structured process. Lower middle market advisors run a tighter ship: detailed CIMs, Axial-managed buyer access, sometimes a mini-auction with multiple bidders.

One critical distinction: exclusive vs. open listings. On an exclusive, the broker controls the process and manages buyer access. On an open listing, the seller may also be talking to buyers directly, through other brokers, or through their accountant. Your strategy should differ. On an exclusive, the broker is your gateway. On an open listing, you may be competing with a buyer who found the seller independently and is negotiating with no commission involved. Always ask.

This is the section that matters most. The public listing on BizBuySell is what is left after the broker's best buyers passed. If you want access to the deals before they go public, you need to become one of those best buyers.

Here is what that takes.

A broker qualifies you in the first 90 seconds of a phone call. They are asking three questions: what is your budget, do you have SBA pre-approval, and have you closed a deal before. If you fumble any of those, the conversation is effectively over.

Before you reach out to a single broker, assemble:

A buyer who walks in with this package signals "I can close." A buyer who says "I'm interested in buying a business" with no documentation signals they are six months away from being ready. If a broker has to babysit you through the basics, you will not see their best deals.

Identify the active brokers in your geography and sector. Start with the IBBA broker directory at ibba.org (look for the CBI designation), BizBuySell (note which brokers have the most inventory in your area), and Axial if you are targeting $2M+ deals.

Introduce yourself with a brief email or phone call. Share your package. Be specific: "B2B services businesses in central Texas with $400K-$800K in SDE, SBA-financeable, owner willing to provide a 10% seller note."

Specificity is a gift to a broker. It tells them exactly when to call you.

Set a calendar reminder to check in every 30 days. A brief email: "Still actively searching. Any new listings that match my criteria?" This keeps you top of mind.

When a broker sends you a teaser or CIM, respond within 24 to 48 hours. A broker will forgive inexperience much faster than they will forgive slowness. The buyer who takes two weeks to review a CIM is not the buyer who gets the next call.

We hear from EBIT Community members all the time that the single biggest unlock in their search was simply being faster and more organized than other buyers. Not smarter. Not richer. Faster.

This is the identity shift. Before your first close, you are an unproven buyer. After it, you are a known closer. Brokers send known closers deals before they go public because they know those buyers can execute.

If you close professionally, handle diligence efficiently, and treat the broker well through the process, your reputation spreads. Brokers in the same market talk to each other. Close one deal well and three brokers hear about it. That reputation becomes your most valuable sourcing asset, worth more than any buyer profile or pre-qualification letter.

The reverse is also true. If you retrade after diligence on every deal, waste broker time on listings you were never going to close, or disappear mid-process, that reputation travels just as fast.

A CIM is not diligence. It is marketing with numbers attached. When a broker sends you one, here is what to look for and what should make you pause.

What a good CIM contains: 3 years of tax returns (or at minimum, P&L statements), a clear explanation of the owner's role and time commitment, revenue breakdown by customer or service line, an adjusted earnings number (SDE or EBITDA) with each add-back itemized, and a reason for selling that makes sense given the owner's age and the business trajectory.

What to question:

Aggressive add-backs without documentation. If the broker recasts $150K in "personal expenses" but cannot provide receipts or tax schedules, proceed with caution. Our Definitive Guide to SDE Adjustments covers which add-backs are legitimate and which are fiction.

Only 1 to 2 years of financials. You need at least 3 years to see trends. A business that only provides the most recent year may be hiding a decline.

The "reason for selling" is partially fiction, almost always. "Owner retiring" sometimes means the owner is burned out and revenue is declining. "Pursuing other opportunities" sometimes means the business has a problem the current owner cannot solve. The CIM presents the seller's best narrative. Your job is to verify it in diligence. We have seen EBIT Community members save six-figure mistakes by simply calling the landlord, checking online reviews, or talking to two or three customers before committing to a QoE.

Customer concentration above 20%. If a single customer accounts for more than 20% of revenue, that is a risk that should affect your valuation. The CIM may downplay it.

Revenue growing but margins shrinking. This often means the business is buying revenue at the expense of profitability. Look at the SDE or EBITDA margin trend, not just top-line growth.

Vague "growth opportunities" as the primary selling point. If the business has obvious growth opportunities, why has the current owner not pursued them? This is usually broker packaging.

The recast number is the broker's best-case pitch. Your job begins with the Quality of Earnings report. See our QoE guide for how to verify what the CIM claims. If you want a quick first-pass before paying for deeper diligence, we built a Business for Sale Analyst GPT that flags common issues in minutes.

When a clean, SBA-financeable listing hits the market, the broker may receive 5 to 15 inquiries in the first week. Most buyers do not lose deals because they were outbid. They lose them because they looked hard to close. Here is how to differentiate.

Submit a strong, clean LOI quickly. Speed and quality win. Your LOI should demonstrate that you understand the business, have a credible financing plan, and can close within a reasonable timeline. See our LOI Template & Guide.

Lead with financing documentation. The most common reason deals die is financing failure. Attach your SBA pre-qualification letter and proof of equity injection to your LOI. Your LOI price matters less than your financing certainty. A $1.4M offer with an SBA pre-qual and proof of funds beats a $1.5M offer from someone who "plans to explore financing."

Tell the seller's story back to them. Brokers relay feedback to sellers. When you can articulate why you are the right operator for this specific business, you stand out from buyers treating the listing as a spreadsheet exercise. Sellers care about legacy, especially Boomers who built these businesses over decades.

Do not retrade unless you find a real problem. If your QoE reveals a $50K adjustment to SDE, that is a legitimate reason to renegotiate. If you use diligence findings as a strategy to chip away at price on every deal, brokers will stop sending you opportunities.

Most searchers waste months working with bad brokers because they are afraid of limiting their deal flow. The opposite is true. Walking away from a bad broker is a net positive because it frees your time for the relationships that actually produce deals.

The brokerage industry has low barriers to entry in most states, and quality ranges dramatically. Here are the warning signs:

No financial information before NDA, and limited information after. A reputable broker shares a teaser (anonymous overview) before NDA and basic financials (P&L summary, SDE/EBITDA, revenue trend) after NDA. If a broker asks you to submit an LOI before you have seen trailing 12-month financials, walk away.

Unrealistic pricing without supporting data. A broker who lists a $400K SDE business at 5x with no justification is either inexperienced or telling the seller what they want to hear. Check comparable multiples using our SDE Multiples article before engaging.

Manufactured urgency. If a broker claims "multiple offers" but cannot provide specifics about the process or timeline, they may be bluffing. A structured process with a clear timeline is professional. Vague pressure is not.

Ghosting after your LOI. If a broker stops returning calls after you submitted an LOI, they either have a better offer or the seller went cold. Do not chase. Ask once, then move on. The ghosting itself is information.

No professional credentials. Look for the CBI (Certified Business Intermediary) from the IBBA or the M&AMI from M&A Source. These are not guarantees of quality, but they indicate the broker has invested in professional development.

Substandard CIM. A two-page flyer with no financials and stock photos is not the same as a 30-page CIM with detailed financial analysis and customer breakdowns. The quality of the CIM tells you how seriously the broker and the seller are taking the process.

The smartest searchers run both pipelines in parallel. This is the framework we recommend to EBIT Community members:

Months 1-3: Lean into brokered deals. Build pattern recognition by reviewing CIMs across multiple industries. Learn what $500K of SDE looks like in different businesses. Establish broker relationships. Submit 2 to 3 LOIs to calibrate your offer strategy. You will likely not close during this period. That is fine. You are building the foundation.

Months 3-6: Layer in off-market outreach. Use the industry knowledge you built from reviewing brokered listings to target specific sectors and geographies with direct owner outreach. Our How to Source Off-Market Deals in the Age of AI article covers the tactical playbook.

Ongoing: Maintain both pipelines. When a brokered deal gets competitive (multiple offers, bidding war), your off-market pipeline gives you the discipline to walk away. When off-market conversations stall, your brokered pipeline keeps momentum.

The worst position is having one deal in your pipeline and feeling like you have to close it. Optionality is the antidote to bad decisions.

If this framework is useful, forward it to someone in your network who is actively searching. The sourcing strategy is the part of the acquisition process most searchers underinvest in.

One more piece of context that directly affects how you work with brokers in 2026.

Seller financing has become increasingly important. In the IBBA Q2 2025 survey, 62% of brokers described seller financing as "very important" in the current market. With SBA rates at 8.5 to 9.5%, structures that include a meaningful seller note at below-market rates improve your DSCR and make marginal deals work. Brokers who understand SBA capital stacks and can educate their sellers on the importance of a seller note are significantly more valuable to you. See our Efficient SBA Capital Stack and Seller Financing guide for current structures.

When you evaluate a broker, ask whether they routinely structure deals with a seller note component. If the answer is no, or if the broker does not understand SBA standby requirements, you will likely end up educating them mid-deal. That is time you do not have in a competitive process.

Disclaimer: This guide is for educational purposes only and does not constitute legal, financial, tax, or investment advice, and does not constitute an offer to sell or a solicitation of an offer to buy any securities or investment interests. Business acquisitions involve significant risks, and outcomes can vary widely based on individual circumstances. Always consult with qualified professionals including attorneys, CPAs, and financial advisors before making acquisition decisions. The EBIT Community does not guarantee the accuracy of information provided or the success of any acquisition strategy. Past performance and examples do not guarantee future results. The investment strategy and examples described are illustrative only and do not represent a comprehensive or binding set of investment parameters; Kodiak reserves the right to modify its strategy and pursue opportunities at its sole discretion.