Business brokers are also called intermediaries or business transfer agents. They play an important role in the world of buying and selling businesses. They take on a variety of tasks aimed to help clients achieve their goals, either to acquire or transfer a business. Some business brokers specialize in certain industries or possess unique, technical characteristics.
Over the recent years, we’ve seen how the business brokerage industry has exploded. Employment opportunities in the sector are ever vibrant and are expected to grow further in the coming years. Hence, it is not surprising why many want to take on this career path.
If you want to be part of this industry, you’re probably wondering if business brokers need a license. Here are some important things you need to know about a business broker license.
Do business brokers hold a license?
A professional license is proof of competence to practice a certain trade, work, or specialization. Professional license requirements for business brokers vary per state. As of date, 16 states require a license to practice the profession, including Florida. Meanwhile, some 13 states require a license as a realtor to commence a career. In other states, a license is not required as long as you work under a brokerage company.
However, all business brokerage agencies or companies are required to secure a business license, which is different from a professional license. This ensures that the brokerage firm has the necessary legal documents to conduct business.
How to become a business broker?
Unlike other regulated professions, business brokers don’t have an established licensing system; hence, the requirements differ per state.
Generally, licensing bodies require education, training, and experience to sit for an exam. Once you pass the exam, you can become licensed.
But as mentioned above, each state has unique licensing requirements. For example, in Florida, anyone who practices the sale of small businesses needs a general real estate broker license. To be eligible to sit for the Florida broker license exam, you need to possess either a four-year degree in real estate or a two-year sales associate license. In California, business brokers are required to have a real estate agent license and work under a real estate broker, even for transactions that don’t involve real estate.
Why do business brokers need real estate licenses?
An Orlando Business Broker emphasized that, technically, there is no “business broker license” available. It might sound absurd but what states require is a real estate license.
A real estate license is required to entitle you to charge a commission or fee for the transfer or sale of real estate. And since most business transactions involve the transfer or sale of real estate, acquiring a license in real estate is necessary.
Selling a business is very much like selling a real estate. Although business brokers require a unique skill set, education and training, they share the same concepts in law, taxation, and accounting. So, a solid background in real estate is extremely relevant and useful for business brokers.
What is a board-certified broker?
To regulate the business brokerage sector, some states have established professional associations that oversee the practice. These associations set the requirements for the profession. For example, in the State of Texas, the Texas Association of Business Brokers (TABB) determines the educational, training, and examination requirements of business brokers.
Board-certified brokers are professionals who have satisfactorily met the association’s requirements. They have met the core education and experience requirements, passed a certification exam, complied with ethical standards, and met the continuing education requirements.
Is a license enough to succeed in the business broker industry?
Although having a license or being board certified is important, it does not guarantee instant success. Below are some critical elements you need in your practice.
- Education and training
- Negotiating skills
- Business management and operations experience
- Communication skills
- Integrity and fairness
Starting a career as a business broker is not simple. There are many hurdles that you need to overcome but for the right person, it can be challenging, interesting, and exciting. With the right mix of education, experience, and personal traits, a business broker career can be lucrative.