Guide
Who can legally sell your business in the US
Updated
Sellers meet intermediaries in four legal positions, rarely explained, and only one is publicly searchable. How to tell them apart, and the arrangement that creates a problem from nothing.
Question 1
Which side of the deal are you on?
This checker is built for owners selling. Buy-side and capital raising are separate mandates and get their own answers.
Email me this result
We will send you these figures and a link back to them. One email, nothing else unless you tick the box.
The four positions
A registered broker-dealer, registered with the SEC and in practice a FINRA member, with individually licensed representatives. An M&A advisor relying on the exemption at 15 U.S.C. 78o(b)(13), lawfully unregistered within the thresholds and conditions.
A business broker handling asset sales, where no securities change hands. And a finder, less a position than the absence of one.
Only the first appears in a public register. FINRA BrokerCheck returns registration status, employment history, exams and disclosure events, free and immediately, for firms and individuals alike.
The finder problem
The most common way an owner creates an accidental securities problem is by agreeing to pay someone a success fee for introducing a buyer. A percentage of a transaction paid for bringing the parties together is transaction-based compensation, and that is the characteristic that turns an introducer into a broker.
It is usually done informally and with the best intentions, often to a friend of the business. The exposure is the same as if it were done formally, and it arrives at closing when the fee falls due and somebody's counsel reads the arrangement.
Three questions, asked in writing
Which position are you in: registered, relying on the M&A broker exemption, or handling asset sales only? Will you at any point receive, hold, transmit or have custody of transaction funds or securities, including escrow? And will you represent the buyer as well, and on what disclosure and consent?
The second one catches good firms out. The exemption disqualifies a broker that takes custody, and escrow arrangements are set up with no ill intent by people who have not read the condition.
What none of this decides
Registration is a floor, not a recommendation. A well run exempt M&A advisor who knows your industry beats a registered firm that does not, and BrokerCheck cannot tell you which is which.
What the checks do is remove one category of risk cheaply, so the judgement you make afterwards is about competence and fit rather than about permission. The SBA's guidance on preparing a sales agreement assumes an attorney reviews it, and that is the right instinct for the engagement letter too.