The pros & cons of co-brokering for entrepreneurs and the business broker

Co-brokering, also known as dual agency, is a common practice in the business brokerage industry where two or more business brokers work together to sell a business. In this scenario, one broker represents the seller and the other represents the buyer. The brokers split the commission earned from the sale.

There are several pros and cons to co-brokering. One major benefit is that it increases the pool of potential buyers for a business, as both business brokers have access to their own networks and resources. This can lead to a faster sale and a higher selling price. Additionally, co-brokering can also provide a neutral third party to help mediate negotiations between the buyer and seller in the business exit planning.

However, there are also downsides to co-brokering. One major concern is the potential for conflicts of interest during the deal origination. Since both brokers are representing both the buyer and the seller, they may not be able to fully advocate for either party. Additionally, co-brokering can also lead to confusion and mistrust among the parties involved.

For entrepreneurs, co-brokering can be both good and bad. On one hand, having two brokers working together can increase the chances of selling the business quickly and for a higher price. On the other hand, entrepreneurs may feel that their interests are not being fully represented in negotiations.

For business brokers, co-brokering can be a good way to increase the chances of making a sale, and therefore earning a commission. However, it can also lead to conflicts with other brokers and a potential loss of trust from clients.

In conclusion, co-brokering is a common practice in the business brokerage industry that can have both benefits and drawbacks. It can increase the pool of potential buyers and lead to a faster sale, but it can also create conflicts of interest and mistrust among parties involved. Entrepreneurs and business brokers should carefully weigh the pros and cons before engaging in co-brokering. It's important to be aware of the potential risks and conflicts of interest that may arise and to have a clear understanding of the responsibilities of each party involved.

Please note this is a very long article and the real-life scenario may be different. It's always recommended to consult with an experienced business broker, M&A advisor and legal professional to fully understand the implications of co-brokering in your particular situation.