On this page
- What is the difference between the three?
- Is a commercial real estate broker the same as a business broker?
- Does it matter if your sale includes property?
- Are business brokers and M&A advisors different?
- What is "post and pray," and why does it cost you?
- Should you sell to a strategic or a financial buyer?
- What should a broker or advisor commit to?
- What are the red flags?
- How is Freedom For Founders different?
- Frequently asked questions
What is the difference between the three?
Commercial real estate brokers value and sell property. Business brokers and M&A advisors value and sell companies, based on earnings, customers, team and how well the business transfers to a new owner. The two skill sets overlap far less than most owners assume.
| Commercial real estate broker | Business broker | M&A advisor | |
|---|---|---|---|
| What they know best | Buildings, land, leases, location | Operating businesses | Operating businesses |
| How value is set | Rents, location, comparable property sales | Normalized earnings and buyer demand | Normalized earnings and buyer demand |
| How buyers are found | Property listings and investor networks | Listings, networks, targeted outreach | Networks and targeted outreach |
| Regulated in Ontario | Yes, RECO registration | Yes, when property or a lease is part of the deal | Title isn't regulated, but the same rules apply to the same work |
| Best fit | The sale includes the building | Selling the business | Selling the business |
Is a commercial real estate broker the same as a business broker?
No. A building is valued on location, rent and comparable property sales. A business is valued on how much it earns, how dependable those earnings are, and whether they will continue after you leave. Selling one well doesn't mean you can sell the other well.
Some commercial real estate brokers list businesses the same way they list buildings: a description, an asking price and a posting. That works for property. For a business, it skips most of what drives the price.
Does it matter if your sale includes property?
Yes. If the building is part of the sale, you need a registered real estate professional to handle that part, and good advisors work alongside one. If the property isn't part of the sale, a real estate licence tells you little about someone's ability to sell your business.
In Ontario, representing a seller where real property or a commercial lease is involved falls under the Trust in Real Estate Services Act, and the person and firm must be registered with the Real Estate Council of Ontario (RECO). Many business sales include the assignment of a lease, so ask any firm how it handles that part of your deal.
Are business brokers and M&A advisors different?
Mostly in name. Both sell operating businesses, and most M&A advisors are brokers by function. What separates a good one from a poor one is their process and what they commit to in writing, not their title.
Some firms calling themselves brokers run careful, confidential, targeted processes. Some calling themselves M&A advisors post a listing and wait. Judge the work, not the label.
What is "post and pray," and why does it cost you?
Post and pray means listing a business on marketplaces and waiting for buyers to call. It is cheap to run but expensive for the seller: it attracts browsers, risks confidentiality, eats your time, and rarely reaches the strategic buyers most likely to pay a premium.
The costs show up in several ways:
- The wrong buyers.Listings draw many inquiries from people who can't finance a deal or don't fit your business.
- Confidentiality risk.The more public the listing, the more likely staff, customers or competitors recognize it.
- Your time.Every unqualified inquiry pulls you away from running the business, and performance slipping during a sale lowers the price.
- One buyer at a time.Without a planned process, offers arrive one by one and you lose the leverage competition gives you.
- Missing the best buyers.Strategic buyers, such as competitors or companies in related markets, rarely browse listings. They have to be approached.
Should you sell to a strategic or a financial buyer?
It depends on what your business offers and what you want after the sale. Strategic buyers may pay more because your business adds to theirs. Financial buyers, such as private equity, focus on cash flow and often want you or your team to stay. A good advisor identifies which buyers fit before marketing begins.
| Strategic buyer | Financial buyer | |
|---|---|---|
| Who they are | Competitors, suppliers, customers, companies in related markets | Private equity, family offices, individual investors |
| Why they buy | Customers, territory, capacity, capabilities | Cash flow and growth potential |
| What they may pay | Often more, if your business adds to theirs | Based on earnings and financing |
| What happens to your team | May be combined with theirs | Usually kept in place |
| Your role after | Often shorter transition | Often asked to stay longer, sometimes with equity |
Knowing your likely buyer shapes everything else: how the business is presented, which buyers get approached first, and which terms you negotiate hardest.
What should a broker or advisor commit to?
Before marketing anything, they should learn your business and your goals. Then they should commit in writing to a marketing plan, a targeted buyer list, confidentiality steps, competing offers before exclusivity, regular reporting, and clear fees.
Ask for these commitments:
- Understanding first.Time spent learning your financials, customers, team and goals before a teaser is written.
- Your terms.Agreement on what matters to you: price, timing, your role after, and what happens to your staff.
- A written marketing plan with a buyer list that includes strategic and financial buyers.
- Confidentiality steps: anonymous teaser, NDA before details, staged release of information.
- Competing offers.Expressions of Interest from several buyers before you sign an exclusive letter of intent.
- Reporting.Who has been approached, who responded and what they said, on a set schedule.
- Who does the work.The person running your file, named.
- Clear fees, including how earn-outs, vendor financing and any "tail" after the agreement ends are treated.
What are the red flags?
Be cautious of anyone who prices your business before learning it, wants to list immediately, relies mainly on public postings, brings one buyer at a time, or asks for a long exclusive agreement with no performance commitments.
- No clear answer on registration where property or a lease is involved
- A valuation that seems designed to win your business rather than hold up with buyers
- No plan for reaching strategic buyers
- No interest in your tax position or the Lifetime Capital Gains Exemption
- Vague answers about who does the work
How is Freedom For Founders different?
Freedom For Founders is a Canadian M&A advisory and exit planning firm. We learn your business and your goals first, then market it to targeted buyers on your terms. Our approach is freedom first, strategy second, sale last.
For the full sale process, see How to Sell a Business in Canada: The 12-Month Playbook.
Frequently asked questions
What is the difference between a business broker and an M&A advisor?
In practice, very little. Both sell operating businesses, and most M&A advisors are business brokers under a different title. What matters is their process: whether they learn your business, market it to targeted buyers, protect confidentiality and create competition before you sign an exclusive deal.
Can a commercial real estate broker sell my business?
A commercial real estate broker specializes in property, which is valued differently from a business. If your sale includes the building, a registered real estate professional should handle that part. For the business itself, look for someone experienced in selling operating companies.
What is post and pray in business sales?
Post and pray means listing a business on marketplaces and waiting for buyers to respond. It often attracts unqualified buyers, risks confidentiality and rarely reaches strategic buyers, who usually need to be approached directly.
What is the difference between a strategic and a financial buyer?
A strategic buyer is a company that gains from combining your business with theirs, such as a competitor or supplier, and may pay more for that reason. A financial buyer, such as private equity, buys mainly for cash flow and often keeps the existing team in place.
How do I choose someone to sell my business?
Choose someone who learns your business before marketing it, commits in writing to a targeted buyer list and marketing plan, collects competing offers before exclusivity, reports regularly and explains fees clearly. Speak to two sellers they have worked with.
