A business broker agreement is a legal contract between a business broker and a client (either a buyer or a seller) that outlines the terms and conditions of their working relationship. The agreement serves to protect the rights and responsibilities of both parties involved in a business transaction. While the specific content of a business broker agreement may vary, here are some key elements typically included:
1. Parties: Identify the names and contact information of the business broker and the client (buyer or seller) involved in the transaction.
2. Scope of Engagement: Clearly define the nature and scope of the business broker’s services. Specify whether the broker will represent the buyer, the seller, or act as a dual agent representing both parties.
3. Listing/Engagement Period: Specify the duration of the agreement, including the start and end dates. This timeframe determines the period during which the broker has the exclusive right to represent the client or market the business for sale.
4. Confidentiality: Include provisions to protect the confidentiality of sensitive business information shared during the engagement. Specify that the broker will not disclose confidential information to third parties without the client’s consent, except when required by law.
5. Fees and Compensation: Outline the fees and compensation structure for the broker’s services. This typically includes the commission or fee structure, such as a percentage of the sale price or a flat fee. Specify when and how the broker will be paid, whether upon the successful completion of the transaction or at specific milestones.
6. Exclusivity and Cooperation: Define whether the client will work exclusively with the broker during the engagement period or if they can engage other brokers simultaneously. Specify the level of cooperation expected from both parties, such as providing accurate and timely information for marketing purposes or attending meetings and negotiations.
7. Responsibilities and Obligations: Clearly outline the responsibilities and obligations of both the broker and the client. This may include the broker’s obligations to market the business, perform due diligence, and facilitate negotiations, as well as the client’s obligations to provide accurate information, cooperate with the broker, and make decisions in a timely manner.
8. Termination Clause: Specify the conditions and procedures for terminating the agreement before the agreed-upon end date. Include provisions for early termination, termination without cause, or termination due to breach of contract by either party.
9. Governing Law and Dispute Resolution: Indicate the governing law that will apply to the agreement and provide provisions for resolving any disputes that may arise. This may include mediation, arbitration, or litigation procedures.
10. Miscellaneous Provisions: Include any additional clauses or provisions relevant to the specific engagement, such as non-solicitation agreements, representations and warranties, or limitations of liability.
It’s important for both the business broker and the client to carefully review and understand the terms of the agreement before signing. It’s also advisable to consult with legal professionals experienced in business transactions to ensure the agreement aligns with applicable laws and protects the interests of both parties.