Reviewer's Note
I've reviewed the claims made by brokers, direct-deal advocates, and marketplace platforms about the best way to buy a business. Most of the advice in this space is accurate but incomplete — it tells you what each path offers without being honest about what each path costs you. Here's my unfiltered assessment.
The first thing to understand about business brokers is the one thing most broker-adjacent content never states plainly: a broker is the seller's agent. Their legal and economic incentives run to the other side of the table. This is not a criticism — it's a structural fact. Understanding it changes how you interpret everything a broker tells you.
The Commission Structure: What It Actually Means for Buyers
Broker fees are almost always paid by the seller — typically 10–12% of the final transaction price for deals under $1 million. The absolute minimum for most brokers is $10,000–$15,000 regardless of deal size. Here's the economic reality that most buyer-facing content glosses over:
The Commission Math
If an owner wants to net $450,000 from a sale and their broker charges 10%, the asking price needs to be at least $500,000. The buyer is indirectly absorbing the commission cost through the asking price — even though they never write a check to the broker.
On a $750,000 deal, the broker commission represents $75,000–$90,000 in negotiating room that doesn't exist in a brokered transaction. In a direct deal, that room is available to both parties.
What Brokers Actually Provide (And What They Don't)
What Brokers Genuinely Provide
- ✓Organized financials and deal documentation
- ✓A structured process with defined checkpoints
- ✓Professional intermediary managing communication
- ✓Access to off-market deals in their network
- ✓Experience navigating SBA financing and lender relationships
- ✓A natural force toward deal completion (their commission depends on closing)
What Brokers Don't Provide
- ✗Representation of your interests (they represent the seller)
- ✗Objective advice on whether you should buy this business
- ✗Price negotiation in your favor
- ✗Incentive to flag problems that might kill the deal
- ✗Access to the seller's unfiltered perspective
- ✗The $75K–$90K in negotiating room absorbed by their commission
The Risks of Buying Direct (That Direct-Deal Advocates Understate)
Direct acquisition — buying without a broker on either side — is how many experienced serial acquirers prefer to operate. The advantages are real. But the risks are equally real, and they're consistently understated in the content that promotes direct deals.
No Process Structure
In a brokered deal, there's a defined process: NDA, CIM review, indication of interest, management meeting, LOI, due diligence, Purchase Agreement. In a direct deal, that structure doesn't exist unless you impose it. Many direct deals fall apart not because the business was bad but because neither party knew what came next.
Unpackaged Financials
Brokers prepare financials for presentation. In a direct deal, you often receive whatever the seller can produce — which might be QuickBooks files with cash transactions missing, three years of tax returns with significant owner add-backs that aren't labeled, and no clean SDE calculation. You or your accountant will need to normalize the financials from scratch.
Emotional Negotiations
Business owners have enormous emotional investment in businesses they've built. Without a professional intermediary managing communication, direct negotiations can become personal quickly. A broker's job includes managing seller emotions and keeping conversations productive. Without one, buyers need to be skilled negotiators who can maintain a working relationship while pressing on price and terms.
Higher Legal Exposure
In a brokered deal, the broker manages the handoff to attorneys and is familiar with standard representation and warranty language. In a direct deal, there's no one to flag when something unusual is being asked — which puts more weight on your acquisition attorney. This isn't insurmountable, but it means your attorney costs are likely higher.
My Decision Framework
Use a Broker When:
- →You're buying a business over $500K and want access to off-market deals
- →You're a first-time buyer who needs process structure
- →You need help navigating SBA financing and complex deal structures
- →The business is in an industry where you lack operational expertise
Buy Direct When:
- →You have prior acquisition experience and can supply the process structure
- →You have identified a specific business you want to buy through your own network
- →You have deep operational expertise in the industry
- →You have your own advisory team (attorney, CPA) already in place
The Hybrid Worth Considering:
A buy-side representative — an M&A advisor who represents you, the buyer — is underused in the lower middle market. Their cost (often 2–4% of the transaction value) is modest compared to the commission built into a seller-side brokered deal. And unlike a seller's broker whose interests diverge from yours at every term negotiation, a buy-side rep's entire mandate is to get you a better deal.
Reviewer's Bottom Line
The broker-versus-direct question is not about which path is objectively better. Both work. Both carry risks. The right answer depends on your experience level, how you source deals, how much of your time the process can consume, and the specific characteristics of the business you're buying. What I will say clearly: if you use a broker, understand that their commission is embedded in the asking price you're paying — and that their incentive is to close the deal, not to protect your interests.