Business Broker as Transaction Broker
In the State of Florida business brokers are required to have a real estate license in order to sell businesses. Unlicensed activity is considered a third-degree felony and punishable by up to five years in prison. However, while we share the same license with realtors there is a key difference in how we operate. Most realtors work as “single agents”. This means that they can only work with buyer or seller not both and that they have fiduciary duties as well as the duty of loyalty to their client. business brokers on the other hand rarely work as single agents. Instead we choose to work as “Transaction Brokers”
As a transaction broker we provide buyers and sellers with a limited form of representation. Unlike single agency transaction brokers do not have a fiduciary duty and to not owe the buyer or seller loyalty. Instead our job is to facilitate the transaction. In this way we can expedite a business transaction by representing both parties.
We are in effect a neutral party. However, we still owe both parties limited confidentiality. This means for example that we are not allowed to tell the seller that the buyer will offer more or tell the buyer that the seller will take less without permission from the party in question.
The transaction broker has the following duties to both buyers and sellers.
1. Dealing honestly and fairly;
2. Accounting for all funds;
3. Using skill care and diligence in the transaction;
4. Disclosing all known facts that materially affect the value of real property and are not readily observably to the buyer.
5. Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing.
6. Limited confidentiality, unless waived in writing by a party. This limited confidentiality will prevent disclosure that the seller will accept a price less than the asking or listed price, that the buyer will pay a price greater than the price submitted in a written offer, or the motivation of any party for selling or buying property, that a seller or buyer will agree to financing terms other than those offered, or of any other information by a party to remain confidential; and
7. Any additional duties that are entered into by separate written agreement.
Acting as transaction brokers allows us better assist both buyers and sellers of businesses which ultimately is to the advantage of all parties.
Anthony John Rigney is a Jacksonville based business broker and Board-Certified Intermediary (BCI). He is the former President of the North Florida district of the Business Brokers of Florida (BBF). If you are interested in buying or selling a business – contact Anthony today at www.qbusinessadvisors.com