How to Become a Business Broker
By Eric Hammer
If you’ve ever watched the 1980s hit move "Working
Girl" with Melanie Griffith and Sigourney Weaver, then you
know exactly what a business broker does (technically, she worked
for a mergers and acquisitions firm, which deals in larger businesses,
but the concept is basically the same); they are the middle man
who helps to negotiate a deal between a buyer and a seller. But
how does one become a business broker? What special skills are
needed to find such a job?
In order to become a business broker, you need to have a head
for business. You need to understand how to read a spreadsheet,
how to understand a P&L (Profit and Loss) statement and you
need to understand human emotions as well. When someone is interested
in selling their business, they often have certain ideas about
the kind of person they’d like to sell to and they will
be counting on you to help them find the right kind of company
to buy their business.
Finally, you need to have an intuitive understanding of what
makes a business a good match for another one. As a business
broker, you may be called upon to help sell small businesses,
in which case you’ll likely be looking for individuals to
purchase the business, however, you will also often be called
upon to help arrange for a merger between two business, in which
case you’ll need to understand how one business’ operations
can be made to fit smoothly with another.
How Much Can You Make?
According to Salary Expert, business brokers earn between
$65,000 and $100,000 annually depending on where they operate
(brokers in the New York City area earn closer to $100,000 while
those in Charlotte, NC and Orlando, FL tend to earn less, closer
to $65,000 annually).
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The world of business brokers is a large one. While brokers
are of course the main people involved in making the deals, there
are other experts who get involved as well. Lawyers must be engaged
to help draw up the papers for your merger or sale and PR firms
often are hired as well to help the newly merged firm "sell"
the concept of the merger to the public (if the merger you help
arrange is a large one). There are even lobbyists who work for
business brokers who will help push particularly large deals
through the SEC (Securities and Exchange Commission, which, among
other things, regulates mergers to make sure they are not going
to create a monopoly), though in most cases, these people work
with mergers and acquisitions firms rather than business brokers.
You may also want to consider working in the world of mergers
and acquisitions firms. While the concept is basically the same,
M&A firms tend to work with larger businesses (ala Working
Girl, mentioned above).
One successful business broker reports that in order to become
a business broker yourself, you need more than just knowledge.
You also need attention to details, knowing what’s going
on at all times and you need to be able to multitask, moving
from one task to the next and back again quickly as you are the
"quarterback" for the sale about to take place.
Qualifications / Requirements
Ideally, you should have an MBA (Masters of Business Administration)
and you should have a background in running a business. If you’ve
never had to run a successful business, even if you’ve had
the training to become a business broker, you’ll have a
tough time relating to the people who may have built their business
up from scratch and who now have decided they’d like to
sell. Even if you don’t have an MBA, a college degree with
a major in finance or economics is generally required for this
kind of work.
First Steps
Start by going to school and earning an MBA if you have not
already done so. Then, look for work as an entry level assistant
business broker. Many successful business broker firms will take
on junior associates and allow them to learn on the job. You
probably will not be brokering large deals on your own right
away but will instead be helping your boss to broker the deals
or may pick up some of the very small jobs. Eventually, as you
work your way up, you’ll be put in charge of larger deals
all on your own.
Resources
All Business: How to Become a Business Broker or
M&A Advisor – An excellent article from a successful
business broker on how to get into the business.
American
Business Broker’s Association – A not-for-profit
organization that works with business brokers on a professional
level and offers training to help people become business brokers.
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