When I was getting my commercial real estate training, it was taught that business brokerage was considered a sort of 'redheaded stepchild' to be avoided if possible. Specializations such as this certainly require special training and experience. Typically, business brokerages only would handle this type of transaction.

Just like property management and other specialized real estate areas, however, given market fluctuations more brokers are becoming involved in listing and selling businesses, a leasehold estate with no real estate to convey. It can be a lucrative part of our business.

Make sure you have at least one experienced mentor if you undertake listing a business--it's an ethical issue and the single most important risk reduction technique. If you are a managing broker, check with your E/O carrier--many do not provide coverage for business brokerage and some will require special verbiage in your contracts and disclosures.

Valuation of the business is a primary issue carrying much risk, as often the numbers stated by an owner offering a business for sale are not the same as the actual numbers (isn't that a shocking revelation!) :)

Be certain that both seller and buyer are advised in writing to involve their accountants and attorneys when determining value. You as the seller's broker cannot valuate the business--this is solely the owner's responsbility.

Buyer's brokers may need to instruct their buyer clients not to expect the full financials to be released until an offer is made (though basic expenses should be provided such as lease amounts, utilities, etc.)

But how do you determine if the business is generating sufficient income to 'pencil out'? (Tell ya in a minute!)

When representing a buyer for a business, especially an 'open to the public' business, educate your buyers that they are NOT acting in their best interest by interfering with the operation of that business.

This can be a 'gray area' to many inexperienced buyers as they may feel they must spend a lot of time in the property to observe. Some cannot resist the urge to chat up the help. Very bad idea.

It's best to have the prospective buyer make a provisional written offer (this can be a letter of intent) showing source of funds to close, with a reasonable due diligence period.

THEN, when a deal is made and the owner has some assurance of the buyer's intentions, buyer makes a small deposit, the principals involve their accountants to look into the finances.

After reviewing the financials, the buyer can make an additional earnest deposit and request to interview any key personnel with seller and buyer agents present. Make sure the agents are present during any interactions between buyer and any part of the business, to reduce the possibility of miscommunications.

You will probably need to seek an escrow company that specializes in business transfers as many escrow companies will not handle non real property transfers.

Anyone who deals in business brokerage, feel free to add to this . . .