Why We Changed Our Commission Structure
The only constant in both business and life is change (well, and taxes).
In the beginning, when we were AdsenseFlippers, we were known as the “20x Guys.” Now, that has changed significantly.
We rebranded to Empire Flippers and started giving higher and more accurate valuations of businesses using our automated valuation tool that goes off actual past sales data.
Fast forward to 2019, we saw an average sales multiple of 29.76x for the year, and the highest multiple we’ve ever sold at is 58x. In quarter one of 2020, we saw our highest ever seller submissions.
Needless to say, our marketplace continues to grow, and we plan to change our commission structure to reflect that.
We’ve always been the best value for the money compared to other brokerages for both buyers and sellers, and we have always been firm on charging a 15 percent commission.
Do other brokers charge less? Some do, but few can match the value that we bring to the table. We have entire teams in place for every step of the sales process unlike our competitors.
Our audience is the biggest and we have one of the most well-read blogs in the industry. We’ve also been able to hit the Inc. 5000 list four years in a row. All of this means we have one of the largest groups of buyers and sellers in the industry, which tends to lead to faster sales and acquisitions for our customers.
Because of this, we felt the 15 percent was more than justified and the majority of our customers have agreed with us.
However, we decided it was time to…
Adapt to the Realities of the Mergers & Acquisitions (M&A) World
We sell businesses ranging from $20k to multiple millions of dollars. That wasn’t always the case, but it doesn’t take a long look at our marketplace to see both all the 7-figure deals we have for sale and have sold if you use the “Sold” filter in our marketplace.
Because the value of our businesses on the marketplace is growing, we decided to change our commission structure to reflect the current state of our business. By making this change, we can still be the best-valued M&A brokerage in the online business space that is as attractive as possible to entrepreneurs of all sizes.
Our New Tiered Commission Structure
Our new commission structure works on a sliding tier system based on our valuation of your business:
- 2% for any business above a $10 million list price
- 5% for any business between a $5 million and $10 million list price
- 8% for any businesses between a $2 million and $5 million list price
- 12% for any business between a $1 million and $2 million list price
- 15% for any business under a $1 million list price
Many businesses on our marketplace won’t be affected by this change since they are still within our standard 15% commission range. Now, the bigger businesses that fall outside of the 15% range can come to us and be sure we are the brokerage for them.
This is also part of our growing strategy as we hone, refine, and expand our processes to meet bigger business demands.
We are currently the largest team in our industry, and with over $130 million worth of businesses sold on our marketplace, we are also one of the most experienced teams.
We believe this change is going to benefit our clients as we continue to grow.
Our listing price will remain $297 for first-time sellers and $97 for repeat sellers just like always. At the end of the day, our new commission structure will hopefully inspire you to keep on striving to build a more valuable asset.
Remember—when you do decide to sell your business, we will be there throughout the entire process, taking the friction out of achieving a profitable exit.
Are you ready to sell your business? Click here.
Photo Credit: Maxisports