What is the difference between the three?
SHORT ANSWER
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.
All three will tell you they can sell your company, and they often present themselves as interchangeable. They aren't, and the choice affects who sees your business, how many buyers compete for it, and what you keep.
| 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 |
| Best fit | The sale includes the building | Selling the business | Selling the business |
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. Some commercial real estate brokers list businesses the way they list buildings, which skips most of what drives the price.
Does it matter if your sale includes property?
SHORT ANSWER
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, the Trust in Real Estate Services Act defines real estate to include leasehold interests and businesses, with or without premises, and prohibits trading in real estate unless registered (Trust in Real Estate Services Act, 2002). Registration is with the Real Estate Council of Ontario, or RECO (RECO).
Many business sales also include the assignment of a lease. Ask any firm whether it is registered and how it handles that part of your deal.
Business broker vs M&A advisor: are they different?
SHORT ANSWER
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, because the same rules apply to the same work, whatever the title.
What is "post and pray," and why does it cost you?
SHORT ANSWER
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 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?
SHORT ANSWER
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.
| 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 |
A good advisor identifies which buyers fit before marketing begins. Knowing your likely buyer shapes how the business is presented, which buyers get approached first, and which terms you negotiate hardest.
What should a broker or advisor commit to?
SHORT ANSWER
Before marketing anything, they should learn your business and your goals, including what matters to you on price, timing and your staff. 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.
- Understanding first: time spent learning your financials, customers, team and goals before a teaser is written.
- Your terms: agreement on 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 and people: who has been approached and what they said, on a set schedule, and 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?
SHORT ANSWER
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. Also watch for vague answers about registration or who does the work, and no interest in your tax position or the Lifetime Capital Gains Exemption.
What this means for you
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.
At Freedom For Founders, 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.
