Financial Rewards of being an
E|E Business Intermediary
The fee for a territory license is currently $14,750. This is an introductory fee for the second phase only and a fraction of what the Business Broker franchises charge. The fee covers all of the training, materials, CRM, the initial drip marketing campaign, your database of companies and ongoing corporate support.
It does not include your travel and lodging costs for training or your office set up, legal fees, and other similar costs of setting up a new operation, which should be relatively nominal.
The average M/A Business Intermediary in the US nets an income of $200,000 to over $500,000 per year. Most firms gross from $2 million to over $50 million in fees depending on size of the firm, how many agents , etc. This is a very lucrative business for those who are qualified and have the skills necessary to perform the tasks.
Business Intermediary firms typically use a Double Lehman formula for determining fees for both a sell side and buy side services. Rather than fees to purchase price being linear, they form a parabola. The formula is:
10% for the first $1 million, plus
8% for the next $1 million, plus
6% for the next $1 million, plus
4% for the next $1 million, plus
2% for all above $4 million.
As an example, the fee E|E charges for a sell side package (to find the buyer and manage the sale process) for a company with a $7 million purchase price is $340,000. As a licensed BI, you receive a large portion of that depending on which stage you are in the E|E 3 tier advancement ranks. So, it doesn't take many accounts before your new or existing firm has significant fees.
E|E generally is focused on the lower middle market companies. This is the tier above that handled by business brokers, although there is a lot of overlap. As a BI, you are generally dealing with larger companies with revenues from a low of $2,000,000 to over $50,000,000. At that size, there is more likely to be more complex ownership/shareholder structures more financial and financing issues to address. There is also more time to organize, market and manage the due diligence process, in addition to a bit more detail in the closing documentation. So, although fees are lucrative you do earn every penny of it.
Fees and fee distribution information is detailed in the Licensing Prospectus.