CBB Confidentiality & Business Listing Management Flashcards

What is an 'exclusive listing' agreement in business brokerage?

Answer: An agreement granting one broker the sole right to market and sell the business for a specified period

An exclusive listing gives one broker sole authority to represent the sale, incentivizing the broker to invest marketing resources in the listing.

What is the difference between an 'exclusive right to sell' and an 'exclusive agency' listing?

Answer: Exclusive right to sell pays the broker commission regardless of who finds the buyer; exclusive agency does not pay commission if the seller finds the buyer themselves

Under exclusive right to sell, the broker earns commission no matter who brings the buyer; under exclusive agency, the seller avoids commission by self-sourcing.

What should a broker do if a seller wants to list at a price the broker believes is significantly above market value?

Answer: Present comparable data to educate the seller, recommend a realistic price, and consider declining if the seller insists on an unrealistic price

Overpriced listings waste marketing resources, create buyer skepticism, and may ultimately harm the seller; honest brokers counsel realistic pricing.

What is a 'co-brokerage' or 'cooperation agreement' in business sales?

Answer: An arrangement where the listing broker offers to split the commission with a buyer's broker who brings a qualified buyer

Co-brokerage expands the buyer pool by incentivizing other brokers to present their clients, increasing the likelihood of a successful sale.

What is 'deal flow' in a business brokerage practice?

Answer: The volume and pipeline of business listings and buyer opportunities a broker manages at any given time

Deal flow refers to the ongoing pipeline of potential deals—both listings and buyers—that sustains a broker's business and revenue.

What information should a business broker NEVER share without explicit seller permission?

Answer: The business's specific financial performance, customer identities, or proprietary processes

Sharing specific financial details, customer lists, or trade secrets without authorization violates the broker's fiduciary duty and the NDA protections in place.