For billing company owners
Should you use a broker to sell your billing company?
What a business broker does and what it costs compared with selling directly to another billing company, plus the questions to ask before you sign.
3 minute readBy the Fieldstone Billing teamUpdated
We’re looking to buy billing companies directly, so we’re not neutral here. A broker can be the right call for plenty of owners, and we’ve tried to write this so you can tell whether you’re one of them.
What a broker does for you
A good broker values the business, prepares the sale materials, looks for buyers without naming you, screens them and keeps the negotiation moving. If you’ve never sold a company, having someone run that process counts for a lot, and competing buyers can raise the price in a way one buyer never will.
The cost is a commission. Synergy Business Brokers, for one, says there are no upfront fees and its commission is earned when your business sells. Other firms charge differently, so get the percentage and any minimum fee in writing.
Where a direct sale can make more sense
Some brokers only take companies above a certain size, and Synergy’s stated floor is $700,000 in annual revenue. With a small client list you may not get a broker at all, or the minimum fee may eat up too much of the price.
Selling directly also means fewer people know about it. You can talk to one or two buyers under an NDA, and there’s no listing for a client to stumble across.
The risk is that you’ve got nobody pushing back for you, and only one offer to judge. If you go this way, get your own attorney and an accountant to check the numbers, and consider talking to more than one buyer.
How the two compare
| Question | With a broker | Selling directly |
|---|---|---|
| Who finds buyers | The broker | You |
| Competing offers | More likely | Only if you look for them |
| Commission | Yes | None |
| Who knows about it | More people, usually without your name at first | Only who you tell |
| Who runs the process | The broker | You and your advisers |
| Size limits | Often | Depends on the buyer |
Questions to ask a broker
- How many medical billing companies have you sold, and what size were they?
- What’s your commission, and is there a minimum fee?
- If part of my price is paid over time, when do you get paid? This one catches people out. If the fee is due in full at closing on a price that includes an earnout, you could owe money you haven’t received yet, and may never receive.
- How long does the agreement run, and can I get out of it?
- If a buyer I already know makes an offer, do you still get paid?
- After the agreement ends, how long can you still claim a commission on buyers you introduced?
Questions to ask a direct buyer
- How have you valued this, and on which numbers?
- How many billing companies have you bought? If you’re talking to a first time buyer, it’s fair to ask how they’d handle your clients and how they’d pay you. Fieldstone is new, so that includes us.
- Who’d do the work on my clients, and where would they be?
- How would I see the numbers behind my payments?
Whichever way you go, you can do both to a point. Talking to a buyer under an NDA doesn’t commit you to anything, and it’ll tell you what a real offer looks like before you sign an exclusive agreement with a broker. Just check whether you’ve already signed anything that limits who you can talk to.
Fieldstone may be a buyer in a sale like this, so read this guide with that in mind. It's general information, and it isn't legal or tax advice.
