How Do You Choose A Business Broker Based On Their Success Rate With Selling Businesses Like Yours?

When choosing a business broker to sell a business, it makes sense to choose one with a higher success rate rather than one with a lower success rate, right?

No, it's not!

But why choose a broker who sells 100% of the businesses he takes on instead of one who sells only 10% (or who refuses to disclose his success rate)?

It's because the self-declared "success rate" is completely the wrong metric ...and I'll explain why:

Intentionally fake

Accidentally fake

We cannot disclose the numbers for confidentiality reasons

The impact of selectivity

Conclusion (and how you can work out a broker's real success rate)

1. Business brokers (and other intermediaries) fake their numbers

Just because they say their rate is 83.4% doesn't mean 83.4% is the truth! They can claim whatever they want but the client has no way of verifying that number. One should take the claim with a large wheelbarrow of salt! Or do better than that and completely ignore the number offered.

The ones who tend to provide very specific numbers tend to be the least reliable.

"83.4%" sounds a lot more credible than "about 80%". The general public seem to be more easily convinced by specific numbers. Some brokers hand out a specific number not because the number is true but because it's good marketing!

Try asking them to prove that 83.4% and see what they say! "Oh sorry, we cannot give you access to our entire client list and CRM because of client confidentiality." That's fair enough. But it means that they have no way of proving that number. They require the prospective client to simply trust them on it!

I know one business transfer agent / broker who has been claiming a very specific percentage, let's say 83.4%, for several years now. One would expect that specific a success rate to change from one year to the next but theirs hasn't changed for over five years now! Given they take on only 5-10 businesses a year, the percentage is highly suspect.

If a broker has provided a very specific number, or quoted a very specific number on their website, it's worth looking at old copies of their site at archive.org. Has this number changed over the years?

2. There are numerous ways of working out a "success rate"

Larger brokers / corporate finance firms / M&A transaction advisers selling mid-cap businesses , as opposed to micro-businesses (yes, there are many different types of intermediaries who sell businesses), are often FCA regulated. Some are even big enough to be AIM listed. So they are unlikely to blatantly lie about their success rate. But the number they provide is still not reliable.

Is it a success rate over the last month, the last year, the last 2.5 years? Was the average calculated over the last five years? Is it including or excluding those clients who pulled out of the sale and/or changed their minds about selling (which does happen a fair bit!)?

In 2024, I had access to a particular corporate finance firm's internal numbers. At any given time they have about 15-20 clients. When I had access to the numbers, they had not sold a single business in 14 months! Yet they were still claiming a circa 80% success rate. When challenged on this, and when I pointed out all the businesses they hadn't sold in the last 14 months, their reply was that those businesses are "still on sale" so they are not included in the stats!

Their 0% success rate (over that 14 month period) was being quoted to potential new clients as almost 80%.

There are a million ways one can calculate "success rate". Unfortunately, there's no industry standard for how this is calculated. A broker can come up with almost any number and find a calculation to justify it. This makes a mockery of the whole idea of "success rate".

3. The best brokers will turn their noses up at giving out these numbers

Business brokers handling micro businesses are usually happy to hand out random claims about success rates. More professional firms at the top end of the market do not play that game.  Highly reputed M&A firms, boutique investment banks and most corporate finance firms wouldn't dream of quoting "success rates". They got their reputation by being very good at what they do and one has to take their ability as a given.

These firms would consider it below them to quote success rates. They might even get offended at the question like a surgeon might get offended if asked what percentages of their patients died on the operating table, or a top barrister might do if asked the percentage of cases s/he wins.

On the other hand, mass market brokers, the ones who cold call or send mailshots out en masse, the ones who deal in the sub £1m market, tend to boast about high success rates.

There are various public discussions about business brokers at this Reddit forum for those readers who wish to take part / ask questions.

4. Success rates depend largely on how selective the broker is with what businesses they take on

Any broker or intermediary firm that's highly selective and takes on only the easiest clients, clients with highly attractive businesses and relatively low price aspirations, will obviously have a high success rate - 100% or near 100%. That's not a measure of how good the broker is!

But that is quite often what you'll find among the better brokers. They'll only take a business on if they see a very high probability of sale.

At the other end of the scale there are mass market brokers like KBS (Knightsbridge), Intelligent Business Transfer, RTA, Blacks, National Business Sales etc. They take on anything and everything, even businesses highly unlikely to find a buyer. In fact, many hand out highly exaggerated valuations to persuade the owners to sign up with them. As a result they could have on their books literally hundreds of businesses that are highly unlikely to ever sell.

The mass market brokers often have success rates of below 5%! Yes, 95% of the businesses some of them take on are doomed to sitting on the shelf and never finding a buyer. But that low success rate reflects the fact that these brokers aren't selective with what they take on. So it is not, in and of itself, an indication or how good or bad they are at selling businesses.

Note: Having a sub 5% success rate doesn't stop some of these brokers from claiming that they sell most of the businesses they take on! They may even quote an 83.4% success rate.

Conclusion

When it comes to real success rates, you won't be surprised to hear that brokers who give the highest valuations tend to have the lowest success rates. They provide theoretically possible but practically near impossible to achieve valuation figures. This makes their clients less likely to get acquired.

If you're interested in getting a true picture on a particular broker's real success rate, here's how you can estimate the success rate, for many brokers (not all),  the percentage of success they have (but it'll take some leg work):

They are many good ways to vet a business broker. We maintain the nation's largest (only!) knowledge base on brokers - their fees, fees structures, sector specialisations, cross border expertise, success rates, FCA registration status, customer feedback and much more. Get in touch if you need assistance with finding the right expertise to sell your business.