How to vet a buy-side search service before you sign

Services that help buyers find businesses are easier to judge than they look. How they get paid sorts them neatly, and that predicts what they will do for you.

This page is not a shortlist. It shows how to place any buy-side service in the right box. It also lists what to verify before you sign an agreement with one.

What to take away

Sorted by how they are paid

There is no best row. A buyer with time and no process wants the bottom row. A buyer with process and no time wants the top two, and the choice between them is a question of whether you would rather pay for patience or for urgency.

None of those rows is a brand, but you will meet them under brand names. BizBuySell is the big public marketplace you can browse without paying anyone; Axial is a platform that routes opportunities to registered buyers; a boutique buy-side search firm is a small team, often working one industry, that agrees to hunt only for you. The brand matters less than the row you can put it in.

What to verify before engaging any of them

Completed purchases by buyers like you. Not businesses listed, not introductions made, not deals under offer. Ask for the number of purchases completed for buyers of your size in the last few years, and for two of those buyers as references. A service that cannot produce a completed buyer to talk to has not completed the job.

Two references are worth more than a client list, because you can ask them what the service missed. Ask what the buyer would do differently, whether the search ran past the time they expected, and whether the fee at closing matched what was described when they engaged the service.

Who else pays them. A buy-side adviser who also takes listings from sellers is on both sides of the same market. That is common and not always a problem, but you need to know before you rely on their opinion of a business that their colleague is selling. The business brokers page explains how the seller's side works; assume any dual-role firm has the incentives of both.

What the fee is measured on. A success fee on the purchase price rewards a higher price. A fee on the price including deferred consideration and earn-outs rewards structures that push money into the future. Ask whether the fee is calculated on what you pay at closing or on the headline, and whether a fee is owed on deferred amounts you may never pay.

The tail. After you end the agreement, for how long does a fee remain payable on a business they introduced, and is the list of introduced businesses written down and handed to you when the agreement ends? An open-ended tail with no written register is a fee waiting to be claimed on a business you found yourself.

Exclusivity. Some agreements make the service your only channel. Decide whether you are prepared to route your own off-market approaches through them, and pay a fee on those, before you sign.

The retainer question

A retainer is not a bad sign. Paying for time buys an adviser whose income does not depend on your deal closing, the only kind who can comfortably tell you to stop.

What matters is what the retainer buys and whether it is credited against a later success fee. A retainer buying honest advice still leaves you exposed if deal structures shift risk onto you at closing.

The general form of a retainer agreement is simple; what is included, and what is billed on top, is where the arguments start. Get the scope in writing before the first invoice.

The finder's fee trap

Finders are paid for introductions. The problem is defining an introduction. A loose agreement can entitle a finder to a fee on a business you were already talking to, one that came through a listing site the same week, or one introduced by a different finder.

Before accepting any introduction, have a written finder's fee agreement. It must name what counts as an introduction, exclude businesses you already know, set what triggers payment, and set an expiry.

Whether a finder needs a license to be paid on a business sale is a regulated question, not a matter of custom. In many states, paid business brokerage falls under the state real estate commission's licensing rules, and a finder's fee on a sale can be caught by the same rules; other states treat it as ordinary contract law. The International Business Brokers Association and M&A Source are professional bodies whose members sign up to a code of ethics, but membership is not a license. Ask your lawyer, and look the person up in the state real estate commission's licensee register, before you agree to pay a fee.

What none of them do

None of these services verifies a business. The listings they show and the packages they forward are the seller's claims, to be read as advocacy until diligence has tested them. None of them arranges your funding, though some will introduce lenders; read how acquisition finance works so you can judge the introduction.

And none of them is your accountant or your lawyer. The earnings need examining by someone qualified to be wrong about them at their own risk, and the agreements need drafting by someone liable for the drafting. A service that suggests it covers those jobs is telling you something about itself.

A short test before you sign

Five questions, one meeting. A service that answers all five plainly is worth considering. One that answers none is a listing site with a salesperson attached. Run the search yourself until you find one that passes.

Common questions