{"id":10803,"date":"2023-10-21T19:36:00","date_gmt":"2023-10-21T23:36:00","guid":{"rendered":"https:\/\/www.solutions4childcare.com\/index\/?p=10803"},"modified":"2026-02-07T01:48:56","modified_gmt":"2026-02-07T06:48:56","slug":"selling-a-child-care-business-and-co-brokerage","status":"publish","type":"post","link":"https:\/\/www.solutions4childcare.com\/index\/selling-a-child-care-business-and-co-brokerage\/","title":{"rendered":"\"It Is Not About Playing Well With Others\": Selling a Child Care Business and Co-Brokerage"},"content":{"rendered":"\t\t
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Co-brokerage commonly refers to the sharing of a listing where often one broker represents the seller, and another broker represents the buyer. The commission paid by the seller is split between the two brokerage firms. In residential real estate, the selling of homes by co-brokerage is very common. In commercial real estate, selling various properties like office buildings, industrial buildings, apartment buildings, and other income-producing real estate, some co-brokerage occurs between brokers specializing in selling and leasing commercial properties. Depending on the particulars of the transaction and size, the listing broker may selectively engage in co-brokerage with other brokers based on their qualifications and level of expertise.<\/p>

Co-brokerage in the buying and selling of businesses is not as common as in residential and commercial real estate. And, you can count on folks supporting co-brokerage and those not supporting or engaging in co-brokerage; each has their reasons. Over the years, I have seen some otherwise very professional brokers engage in lots of name-calling, mudslinging, and, in general, make untrue, inappropriate remarks about business brokers that do not co-broker or allow other brokers (this includes residential brokers, commercial brokers, or business brokers) to work on their business for sale listings.<\/p>

Business brokers that support co-brokerage often say that co-brokerage works in residential and business brokerage is the same as residential \u2013 well, that is not a comparison of similar things. The supporters of co-brokerage often accuse brokers who do not engage in co-broker of being greedy, selfish, not having the sellers\u2019 best interests in mind, etc., etc. \u2013 in general, the brokers that do not co-broker are accused of \u201cnot playing well with others.\u201d<\/p>

So, what about co-brokerage and the selling of childcare businesses? Let\u2019s take a closer look at the advantages and disadvantages of co-brokerage regarding working with childcare buyers and sellers.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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  • \n \n \n Broker Licensing<\/span> \n <\/li>\n
  • \n \n \n Residential RE Broker<\/span> \n <\/li>\n
  • \n \n \n Commercial RE Broker<\/span> \n <\/li>\n
  • \n \n \n General Brokerage<\/span> \n <\/li>\n
  • \n \n \n Child Care Speciality<\/span> \n <\/li>\n \n <\/ul>\n <\/div>\n \n
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    \"\"<\/p>

    Most people are unaware that there is no license to be a business broker. Yes, you heard me \u2013 there is no business broker license. A few states, like Illinois, offer a business broker license \u2013 which only requires filling out an application and paying a fee \u2013 much like a business operation or privilege license. Other than the state of Nevada, which requires an individual to take a 27-hour business brokerage class through one of the real estate schools to become a business broker, no other state requires specific training to become a business broker.<\/p>

    Since starting my business brokerage career in 1995, I have found it unfortunate that specific training and licensing are not required to offer business brokerage services. Often, 70% or more of a person’s net worth is directly tied to their business \u2013 no matter how small or large the business. And, when it comes to exiting and selling their business, they could have someone with no training and limited experience representing them. Over the years, I have tried to have an impact on supporting the establishment of licensing and training for business brokers at the state level. Unfortunately, as they say \u2013 \u201cfollow the money.\u201d There are so few individuals offering business brokerage services. The funds required to create state laws requiring training, successful examination completion, experience requirements, ongoing oversight, and regulatory compliance exceed the state funds and resources available.<\/p>

    However, all states require individuals representing others in the selling or leasing of real property to have a real estate license. Almost all businesses, other than very small home-based businesses and some completely online businesses, operate out of leased or owned real estate. Some states clearly indicate that business brokers must have a RE license in their state RE licensing laws. However, some states’ RE licensing law is unclear on the requirement for business brokers to hold a real estate license. Therefore, it is common to find individuals offering business brokerage services who are not licensed as a real estate broker.<\/p>

    I have been a licensed RE broker since the 80s and hold an RE license for each state where I sell childcare businesses. To obtain and maintain each of these state RE licenses, I have spent hundreds of hours in RE licensing courses. None of these courses covered any content about selling businesses \u2013 nothing \u2013 not a thing. All state RE licensing commissions make it clear \u2013 when an individual completes the required training, passes the exam, and is awarded a RE license, they are deemed competent to practice residential real estate \u2013 selling homes. RE brokers are encouraged to obtain specific training to sell commercial real estate, industrial real estate, farms, and land, or anything other than selling residential real estate \u2013 homes. Because the required training to obtain a RE license did not include training in these specialized areas.<\/p>

    Now, most folks are not inclined to spend time and money obtaining a license unless they think it is required by law. Those same folks who avoid getting a RE license also rarely spend any time or money on business brokerage training courses, certifications, or other coursework that would increase their knowledge of business operations, financial management, business valuation, commercial real estate valuation, and other things that could greatly aid in their ability to advise and represent business owners.<\/p>

    Back to co-brokerage. Given that some states do require a RE license, and some do not, it makes the relationship established when co-brokering \u2013 the sharing of a listing and its associated liability for the broker that obtained the listing agreement more complex. If the listing broker allows someone not licensed to work on their listing, you can see how working with unlicensed individuals could be a real problem. In addition, each state has RE licensing laws regarding working with RE brokers residing in other states. Researching various state RE licensing laws and making sure the individual requesting to co-broker is appropriately licensed, properly registered with the secretary of state to conduct business within the state, and has the knowledge and experience in selling childcare businesses and associated real estate takes a lot of time. Time that most specialized childcare business brokers like me do not have.<\/p>

    And lots of liability is also incurred when allowing unlicensed, unqualified individuals to work on a listing agreement. It is a quick route to losing your RE license and potentially damaging a seller\u2019s business. Therefore, you will find that many business brokers \u2013 particularly those specializing in only selling one type of business \u2013 like childcare \u2013 do not often engage in co-brokerage.<\/p> <\/div>\n\t\t \n

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    \"\"<\/p>

    As discussed in the Licensing section above, most state RE licensing training focuses on selling houses \u2013 residential real estate.\u00a0 The selling of homes is complex enough to require extensive training. Most individuals who obtain an RE license do so to work with individuals looking to buy or sell a home. Only a small percentage of RE brokers sell anything other than residential properties.<\/p>

    Although they do not have any training in selling businesses, some residential RE brokers also occasionally sell businesses. This is more common in small towns and rural areas where it can be common for RE brokers to list and sell all sorts of properties. However, without some training in selling businesses, the residential RE broker may lack the knowledge and skill necessary to accurately value a business and represent a business owner in the sale of their business.<\/p>

    Each month, I receive several requests from residential real estate brokers to co-broke the childcare businesses I have listed. Usually, the RE broker knows or has been contacted by a buyer seeking assistance finding out what childcare business we have for sale. Often, the buyer has already contacted our office and does not want to follow the steps required \u2013 completion of buyer registration forms, signing a confidentiality agreement, providing proof of funds, or the capacity to obtain financing to learn which childcare business is for sale. So, they reach out to a friend or family member with a RE license and ask them to contact us and get the information they seek without going through the process. Rarely does the residential RE broker have any training or experience in selling businesses \u2013 and little if any knowledge about selling childcare businesses.<\/p>

    As the listing broker, allowing an inexperienced residential RE broker to work off of our childcare business listings exposes us to liability for their actions \u2013 this includes everything they do \u2013 good or bad. And, since they have limited or no experience in selling childcare businesses, they can easily misrepresent things about the business, do things that breach confidentiality, and generally result in no sale or damage to the childcare owner\u2019s business. Childcare business owners often only get one chance to sell their childcare business; having anyone involved in the transaction who is not knowledgeable and qualified is not in the seller’s best interest.<\/p> <\/div>\n\t\t \n

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    \"\"<\/p>

    Some commercial RE brokers have obtained extensive, specialized training and certification in selling and leasing commercial properties. However, it is also common to find residential RE Brokers selling and leasing commercial properties without having obtained any training in commercial real estate.<\/p>

    Well-trained and experienced commercial RE brokers may have the skills and knowledge to provide some assistance with the sale or lease of a childcare building. However, they often do not know childcare business operations, how childcare businesses are valued, how to protect the confidentiality, how to obtain financing for both the real property and business nor how to determine if a buyer is qualified to purchase and operate a childcare business.<\/p>

    As with residential RE brokers in small towns and rural areas, it is common to find commercial RE brokers also selling businesses. Some have obtained training in business brokerage, and some have not. As the cost associated with childcare buildings and land has increased, more commercial RE brokers have started trying to list and sell childcare buildings and land. They will often tell you that their primary focus is having the opportunity to sell or lease the real property and only list the childcare business to get the RE listing.<\/p>

    Commercial RE brokers often contact childcare business brokers like me seeking to co-broke so they can sell the childcare building and land to real estate investors they know. The part they are overlooking is that a real estate investor will not buy a childcare building unless the individual or company that purchases and operates the childcare business is a credit-worthy tenant and knows how to operate a childcare business. As a broker specializing in selling childcare businesses, I know the most important thing is finding the right buyer for the childcare business. Helping the childcare business buyer to obtain financing to purchase the building and land or an investor to purchase the building and land and provide the childcare buyer with a lease is the easier part of the transaction. So, co-brokering with commercial RE brokers is often not needed. It does not help and can hinder selling the childcare business.<\/p> <\/div>\n\t\t \n

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    Business brokers that list and sell all types of businesses are practicing general business brokerage. General business brokerage is the most common way new business brokers start their career, and it is how I got started in 1995.<\/p>

    Most general business brokers list small to medium-sized businesses, often in a smaller, more local area. Depending on the area population, some general business brokers do not need to go outside of about an hour of their office or home base to find enough businesses to list and sell.\"\"<\/p>

    Successful general business brokers who enjoy a long-term career do so because they develop the skill sets to determine which businesses are worth listing, at what price, and which types of businesses create the most buyer interest.<\/p>

    General business brokers often do not have in-depth knowledge of any particular type of business. They are mainly focused on listing good, solid, saleable businesses. And only spend their time with serious, qualified buyers. You will find some general business brokers who will engage in co-brokerage \u2013 and share their listings with other business brokers. They are often selective and will only agree to co-brokerage with other experienced business brokers they know well and cover the same market area.<\/p>

    Brokers that practice general business brokerage can be a good option for childcare owners seeking to sell a small or medium-sized business under 75 licensed capacity. The local general business brokerage firm will be more likely to have individual buyers looking to purchase a small or medium-sized childcare business. The general business broker may not know much about childcare businesses, so an owner may need to help them learn what they need to know about the childcare industry to sell the business.<\/p>

    Most business brokers specializing in childcare often only list large centers; some only list and sell multi-unit operations. Should you own a small or medium childcare business, your best bet is to meet with several local business brokers, determine their experience and knowledge in selling businesses, and select the one you feel most comfortable with. If your childcare business is large \u2013 say licensed for more than 75 or the ability to be expanded, working with a business broker that specializes in childcare is your best option.<\/p>

    Brokers specializing in childcare will have the knowledge and skills to accurately analyze and value your business. Brokers specializing in childcare businesses will also have a database of individual and corporate buyers looking for centers like yours. Since general business brokers work across multiple industries and businesses, they rarely know the buyers looking to purchase larger childcare businesses. They may know a few, but the business broker specializing in childcare databases will contain hundreds of buyers, not just a few. The broker specializing in childcare will also have the market knowledge and expertise to help you obtain the highest value\/best offers for your childcare business.<\/p>

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    \"\"Over time, business brokers who specialize in childcare have gained the experience and knowledge necessary to help owners of particularly large and multi-unit childcare businesses.<\/p>

    As I write this article, I celebrate my 28th year as a childcare business broker. During those years, I have worked with hundreds of childcare business owners across multiple states. Selling a childcare business requires extensive knowledge of the industry, each state’s licensing requirements, program operations, financial management, knowledge of the special use real estate associated with a childcare business, and numerous other things. This knowledge is only gained through the full-time specialization of selling childcare businesses for many years. Business brokers that list and sell all types of businesses will rarely have the level of childcare industry-specific knowledge required to provide you with the best representation.<\/p>

    If the business buyer knows more about the childcare businesses than the business broker representing you, guess who loses? That is correct \u2013 you!\u00a0 To ensure you receive the highest value for your childcare business and increase your chances of a successful transaction, select a business broker that specializes in child care \u2013 not a business broker that lists and sells all types of businesses, not a commercial real estate agent that may understand real estate but has little knowledge about a childcare business, not a residential real estate broker that sells houses, and not any other individual or advisor whose primary business or service offering is anything other than selling childcare businesses \u2013 fulltime.<\/p>

    Most business brokers that specialize in childcare do not engage in co-brokerage. One exception will be should the business broker not hold a real estate license in the state; they may team up with a real estate broker within the state out of necessity to comply with state licensing laws and complete the transaction. Outside of meeting state licensing requirements, most brokers specializing in childcare do not see the need to co-broke \u2013 share their childcare business listings with other brokers. Why not?<\/p>

    • Childcare business brokers are specialists \u2013 they know how to analyze, price, market, and sell childcare businesses. They do not need the assistance of another business broker.<\/li>
    • Childcare business brokers have an extensive list of buyers \u2013individual, regional, and national chain buyers and private equity groups. They do not need to work with another broker to find the buyers.<\/li>
    • The old newspaper classified ads used to advertise businesses for sale and find business buyers years ago have been replaced by digital advertising \u2013 the Internet. No matter where the buyers are located, they can do a Google search to find brokers specializing in childcare and view their childcare listings on the firms’ websites or several business-for-sale listing sites. Even in slow economic times, we receive hundreds of new buyer inquiries yearly at Solutions 4 Child Care. In robust economic times, we can have well over a thousand new childcare business buyers contact us. This includes individual buyers, new start-up childcare chain operators, private equity groups, and companies seeking to invest in the real estate used by the childcare business. If a buyer is looking to purchase a childcare business, they can find our company and our listings. We do not need to engage in co-brokerage to locate buyers \u2013 the buyers find us online.<\/li>
    • Engaging in co-brokerage can expose the listing broker to substantial liability for the actions of the other brokers and folks within the other brokerage firms. Proponents of co-brokerage always try to compare business brokerage to how co-brokerage Is common in residential and commercial real estate. There are very few comparisons between selling a home, a building, or a piece of land and selling a business \u2013 it is just not an accurate comparison. Unless the other business broker specializes in selling childcare businesses and has extensive training and experience, the listing firm exposes itself to substantial liability when engaging in co-brokerage.<\/li>
    • Co-brokerage dramatically increases the chances of a breach of confidentiality and damage to the childcare business.<\/li>
    • The childcare business broker provides a specialized service and advisory role to the childcare business owner just as the attorney, CPA, real estate appraiser, business appraiser, or other professional advisors involved in the transaction. Comparing the services offered by a childcare business broker to those of the other professionals is a more accurate comparison \u2013 and the other professional advisors involved in the transaction are not co-brokering their services with another professional to get the job done.<\/li>
    • A listing broker has a fiduciary relationship with the childcare business owner. This means the childcare business broker must do what is in their client’s best interests, the owner. It is not in the client’s best interests to engage in co-brokerage with individuals who do not have the necessary knowledge and skills. It is not in the client’s best interest for a childcare business broker to allow an unqualified broker to work on selling their childcare business.<\/li>
    • The hardest thing to do in a business brokerage is to obtain the level of knowledge, experience, and skill needed to gain the confidence of a childcare business owner. Most business brokers will never put in the time and effort required to become trusted advisors to childcare business owners. So, when they cannot get childcare owners to list their businesses with them, they try to help buyers find childcare businesses to buy \u2013 those that other brokers have listed.<\/li>
    • Most individual business buyers do not sign a buyer representation agreement with a business broker. They tell all the business brokers they know to call them if they come across a business they think they would be interested in. The the regional, national, multi-unit childcare operators, and private equity groups rarely hire (under a written representation agreement) a business broker to represent their company. The large companies employ professional\u00a0 M&A buyers – directly as a company employee.. Most of these companies will also not pay a retainer or any other fees to retain an outside buyer broker. The buyers, both individual and corporate buyers seeking to purchase large childcare businesses, rarely have to use buyer brokerage representation as they prefer to work directly with the listing broker and establish a relationship with the brokers listing the childcare businesses so they will have access to new listings in the future.<\/li><\/ul> <\/div>\n\t\t <\/div>\n <\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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      I started this article by saying\u2026 Co-brokerage in the buying and selling businesses is not as common as in residential and commercial real estate. And, you will find folks who support co-brokerage and those who do not support or engage in co-brokerage; each has their reasons.<\/p>

      Over the years, I have seen some otherwise very professional brokers engage in lots of name-calling, mudslinging, and, in general, make untrue, inappropriate remarks about business brokers that do not co-broker or allow other brokers (this includes residential brokers, commercial brokers, or business brokers) to work on their business for sale listings. To engage in co-brokerage or not is just a business decision. Each business brokerage firm owner must decide to engage in co-brokerage or not based upon what they feel is best for their clients, to co-broke with some brokers but not others, structure how they chose to provide representation and advisory services, the level of liability they are willing to incur, and how they want to run their brokerage business.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

      Co-brokerage commonly refers to the sharing of a listing where often one broker represents the seller, and another broker represents the buyer. The commission paid by the seller is split between the two brokerage firms. In residential real estate, the selling of homes by co-brokerage is very common. In commercial real estate, selling various properties…<\/p>\n","protected":false},"author":1,"featured_media":10807,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[134,86,113,104],"tags":[],"class_list":["post-10803","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-child-care-business-broker","category-child-care-business-valuation","category-child-care-owner-exit-planning","category-child-care-real-real-estate"],"acf":[],"yoast_head":"\nSelling a Child Care Business and Co-Brokerage - Solutions 4 Child Care<\/title>\n<meta name=\"description\" content=\"Co-brokerage - sharing of real estate listings works well for residential real estate. Not always the best for selling child care businesses.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.solutions4childcare.com\/index\/selling-a-child-care-business-and-co-brokerage\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Selling a Child Care Business and Co-Brokerage\" \/>\n<meta property=\"og:description\" content=\"Co-brokerage - sharing of real estate listings works well for residential real estate. 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Since 1995, Donna Dailey, the founder of Solutions 4 Child Care, has worked closely with child care owners to increase revenues, decrease expenses, and in turn increase the profitability and value of their child care business.","url":"https:\/\/www.solutions4childcare.com\/index\/author\/donnad\/"}]}},"rttpg_featured_image_url":{"full":["https:\/\/www.solutions4childcare.com\/index\/wp-content\/uploads\/2023\/10\/Playing-in-Sandbox-Large.jpg",800,485,false],"landscape":["https:\/\/www.solutions4childcare.com\/index\/wp-content\/uploads\/2023\/10\/Playing-in-Sandbox-Large.jpg",800,485,false],"portraits":["https:\/\/www.solutions4childcare.com\/index\/wp-content\/uploads\/2023\/10\/Playing-in-Sandbox-Large.jpg",800,485,false],"thumbnail":["https:\/\/www.solutions4childcare.com\/index\/wp-content\/uploads\/2023\/10\/Playing-in-Sandbox-Large-150x150.jpg",150,150,true],"medium":["https:\/\/www.solutions4childcare.com\/index\/wp-content\/uploads\/2023\/10\/Playing-in-Sandbox-Large-300x182.jpg",300,182,true],"large":["https:\/\/www.solutions4childcare.com\/index\/wp-content\/uploads\/2023\/10\/Playing-in-Sandbox-Large.jpg",800,485,false],"1536x1536":["https:\/\/www.solutions4childcare.com\/index\/wp-content\/uploads\/2023\/10\/Playing-in-Sandbox-Large.jpg",800,485,false],"2048x2048":["https:\/\/www.solutions4childcare.com\/index\/wp-content\/uploads\/2023\/10\/Playing-in-Sandbox-Large.jpg",800,485,false]},"rttpg_author":{"display_name":"Donna Dailey","author_link":"https:\/\/www.solutions4childcare.com\/index\/author\/donnad\/"},"rttpg_comment":0,"rttpg_category":"<a href=\"https:\/\/www.solutions4childcare.com\/index\/category\/child-care-business-broker\/\" rel=\"category tag\">Child Care Business Broker<\/a> <a href=\"https:\/\/www.solutions4childcare.com\/index\/category\/child-care-business-valuation\/\" rel=\"category tag\">Child Care Business Valuation<\/a> <a href=\"https:\/\/www.solutions4childcare.com\/index\/category\/child-care-owner-exit-planning\/\" rel=\"category tag\">Child Care Owner Exit Planning<\/a> <a href=\"https:\/\/www.solutions4childcare.com\/index\/category\/child-care-real-real-estate\/\" rel=\"category tag\">Child Care Real Real Estate<\/a>","rttpg_excerpt":"Co-brokerage commonly refers to the sharing of a listing where often one broker represents the seller, and another broker represents the buyer. 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