What is a Business Broker?
Business Brokers, also called intermediaries or business transfer agents, help clients facilitate the sale of privately held businesses to entrepreneurs looking to purchase a business.
But do you need a license to become a business broker? In this blog, we’ll discuss the licensing requirements for business brokers, which states require licensing, and why you may want to become a licensed business broker, even if your state doesn’t require it.
Business Broker Licensing Requirements
To become a business broker, you are not currently required to hold a business broker license, however many states do require that you have an active real estate license. Some states have additional requirements, for example: Nevada requires a Business Broker Permit and in Illinois, you must register as a Business Broker.
Real Estate Licensing Requirements for Business Brokers
In states where real estate licensing is required to become a business broker, there are certain steps that must be taken to obtain the necessary credentials. This generally involves taking a real estate license course, which is often offered online, and passing the state licensing exam.
Next, you’ll need to affiliate with a broker, which is commonly referred to as “hanging your license with a broker” or you can continue your education and become a real estate broker. If you choose to affiliate with a broker, you will forfeit some portion of your commission to the broker. If you prefer not to leave any money on the table, you may want to consider getting your real estate broker license.
States that Require a Real Estate License to Become a Business Broker
- Illinois (Illinois does not actually require a license, but registration with the state securities commission is necessary).
- South Dakota
Requirements vary by state and are always subject to change, so it’s important to check with your state to review their current regulations and any other requirements that need to be met prior to becoming a business broker.
What if Your State Doesn’t Require You to Get a Real Estate License to Become a Business Broker?
Having a real estate license can be an invaluable asset for a business broker. Not only does it allow you to provide a complete package of services to your clients, but it also gives you access to valuable resources to better serve them.
The sale of a business generally includes commercial real estate or the assignment or transfer of a lease. Without a license, you can’t handle the sale of real estate so you will frequently need to partner with a licensed real estate agent and share a percentage of your commission with them.
As a licensed real estate agent, you’re able to handle these transactions providing a seamless experience for your client and a larger commission for yourself.
Being licensed also gives you access to valuable industry-specific databases and tools including Multiple Listing Services (MLS), which provide important information about current market trends and pricing data.