States A License Is Required

The journey to selling your business begins with selecting an appropriate business broker. To make an informed choice, it is essential to comprehend the certifications and licenses necessary for a business broker to operate legally in your state. This understanding ensures that you engage a qualified broker who adheres to all relevant regulations and laws throughout the sales process. In this review, we will examine the certifications and licenses that business brokers must possess to function effectively.

What Are The Educational Requirements For Business Brokers?

The educational prerequisites for business brokers differ from state to state. While your educational background may not directly determine your eligibility to become a business broker, certain states mandate a specific level of education to obtain the necessary licenses (such as a real estate license) and certifications. In many states, a Bachelor’s degree or higher is a requirement for operating as a business broker, particularly in those states where a real estate license is obligatory.

What Are The Licensing Requirements For Business Brokers?

There Is No Federal "Business Broker License," & Most States Do Not Issue A Specific Business Broker License.

However, some states do require a real estate license to function as a business broker, while others do not impose this requirement.

As of April 2023, the states that necessitate a real estate license for individuals aspiring to become business brokers include:

The Below States Require A Real Estate License To Become A Business Broker

The Below States Do Not Require A Real Estate License To Become A Business Broker

Why Do Certain States Mandate Business Brokers To Hold a Real Estate License?

A significant number of business transactions involve real estate assets. For instance, a manufacturing firm may include its warehouse in the sale. When real estate is part of the business transaction, it is likely that the business broker will need to possess a real estate license, regardless of whether the state mandates such a requirement for business brokers. If the broker lacks a license, they may be compelled to collaborate with a licensed real estate agent or broker to facilitate the transaction. In states that do not impose a requirement for business brokers to obtain a real estate license, having such a license can still be advantageous. Without a real estate license, a business broker may find it necessary to engage directly with a real estate broker, especially when real estate is involved in the sale. However, this situation may differ if the business owner is leasing rather than owning the property utilized for business operations. In states where a real estate license is not required, the lease is typically regarded as secondary to the business sale.

What Certifications Are Available For Business Brokers?

Business brokers have access to various certifications that enhance their credibility by demonstrating advanced knowledge and the necessary skills to function effectively in their role. Some states have specific organizations that oversee the certification process for business brokers.

For Example, The Texas Association Of Business Brokers (TABB) Offers Certifications For Brokers Operating In Texas.

The International Business Broker Association (IBBA) also provides professional designations and educational opportunities for business brokers, including the Certified Business Intermediary (CBI) certification.

This certification signifies that a business broker has achieved “proven professional excellence through verified education as well as exemplary commitment to the field.”