Ready to have a truly different selling experience? Call us today!

What is a Business Broker? What is an M&A Advisor?

A business broker is an individual or company that assists in purchasing and selling a business. Often business brokers handle main street businesses, valued from a few hundred thousand dollars to a few million dollars. Some business brokers, at least those with the right skill set and credentials, also handle middle-market transactions. The middle market is usually businesses where the transaction value is several million up to about $50MM but typically is not a publicly traded company. M&A advisors are traditionally involved with middle market transactions, but some also work with publicly traded companies. But, like business brokers who sometimes are involved with the middle market, some professionals that call themselves M&A advisors also sell main street businesses. A little complicated, right? But beyond their title, what licenses, skills, and credentials should you look for when selling your business? The answers may surprise you…

Business Brokers in California must be licensed by the state. While selling a business can sometimes include selling real estate, the process and skill set involved with selling a business is entirely different. That is why it’s odd but important to know that California business brokers require a license issued by the Department of Real Estate. Many out-of-state business brokers advertise and try to list and sell California-based companies. Some “finders or consultants” try to avoid the licensing requirements by using a different title. But if you sell a business in San Diego or anywhere in California, ensure the broker is licensed.

Beyond being licensed, a business seller should also ensure that their broker has the skill set to understand the complexities of a business transaction. That includes understanding financial statements, tax returns, leases, and just business in general. Obviously, a degree in business, accounting, or a related field helps, but that is not a substitution for experience. So, make sure your business broker has personally sold at least 10-20 businesses and that they were of similar complexity and transaction value as your business. A business broker that has sold five delis for $100k is probably different than the person you want handling your $3MM manufacturing business sale.

Some of the most qualified and successful business brokers in San Diego have earned professional credentials. But beware, some credentials are issued by franchisors without real requirements, and some are issued by organizations that “collect a fee for a degree.” Business Brokers in California can earn the Certified Business Broker designation issued by the California Association of Business Brokers. To earn the CBB designation, business brokers must be licensed, have worked in the industry and actually closed a minimum number of transactions, attended and passed several courses, and passed a comprehensive exam. The International Business Brokers Association also grants the Certified Business Intermediary (CBI) certification, with similar but more rigorous requirements. A broker who has taken the time to earn a professional designation will likely have more up-to-date knowledge of their industry and a greater dedication to their profession.

M&A Brokers must also be licensed. Some brokers may be licensed through the Department of Real Estate, but others might be licensed to sell securities. Usually, M&A Brokers who are securities licensed deal with much larger transactions, such as publicly traded companies or the sale of stock as an investment. M&A brokers are also often involved with raising capital, whereas a business broker is not licensed to sell securities or to raise capital.

Many who work in M&A have finance, investment banking, or corporate mergers and acquisitions backgrounds. It’s common to see M&A Brokers who are also CPAs or Attorneys involved in the sale of larger middle market companies. There are also many designations, including the Merger and Acquisition Master Intermediary, issued by the M&A Source. Other professions like CPAs or Attorneys also issue designations to their members who specialize in selling businesses.

So, what does this all mean? When you decide to sell your business, it is likely one of your lifetime’s most significant financial events. Not all brokers are created equal. Find one who is licensed, has personal experience selling companies of your size, and has taken the time to earn a meaningful professional designation. Selling a business in San Diego can be challenging, so choose your professional advisor wisely!

Share This Article


Related Posts


Selling or Buying a Business? Asset Sale vs. Stock Sale

When considering the sale of a business, Sellers are often confronted with a critical decision: should they opt for an asset sale or a stock sale? Each structure comes with its own set of advantages and disadvantages, and understanding the distinctions between the two can significantly impact the outcome of the transaction.

Read More »