ARIZONA BUSINESS BROKERS ASSOCIATION

NORTHEN, CENTRAL & SOUTHERN CHAPTERS

IBBA Standards of Practice

IBBA Business Brokerage Standards

Reproduced from the International Business Brokers Association

PREAMBLE

1.1 To enhance and maintain the quality of business brokerage for the benefit of the business brokerage profession and users of business brokerage services, the International Business Brokers Association, hereafter known as the IBBA, has adopted these standards. These standards are designed to provide guidance to business brokers when conducting business brokerage services through Uniform Practices and Procedures.

1.2 The IBBA has established authoritative principles and a code of professional ethics. These Standards include guidelines, either explicitly or by reference, which are applicable to the business brokerage industry.

1.3 These Standards incorporate, where appropriate, all relevant business brokerage standards adopted by the IBBA.

1.4 These Standards provide minimum recommended guidelines to be followed by business brokers in the course of providing business brokerage services.

1.5 Deviations from these Standards are not intended to be the basis of any civil liability; and should not create any presumption or evidence that a legal duty has been breached; or create any special relationship between the business broker and any other person.

BBS-I STANDARD OF CONDUCT IN DEALING WITH OTHER BUSINESS BROKERS

I. PREAMBLE

  1. In the interest of promoting cooperation among Business Brokers, this Standard shall serve as a guideline to be followed in the course of serving as an Intermediary in the transfer of business ownership interests.
  2. The purpose of this Standard is to:
    1. define and describe the general guidelines for Business Brokers when dealing with other Business Brokers involving the transfer of business ownership interests;
    2. encourage greater understanding and cooperation among Business Brokers,
    3. encourage sharing experience and knowledge among Business Brokers for the benefit of the business brokerage profession, clients, customers and the public good.
  3. This Standard is an integral and inseparable part of the General Preamble to the Business Brokerage Standards of the International Business Brokers Association.

II. GENERAL GUIDELINES FOR COOPERATING RELATIONSHIPS

Business Brokers should:

  1. utilize their abilities, talents and shared commitments to professional standards for the benefit of the business brokerage profession, clients, customers and the public good.
  2. obtain agreements of terms and conditions for compensation in writing,
  3. treat all proprietary information about clients and customers confidentially and not disclose such information to others without prior written consent,
  4. not solicit a client who has an Exclusive Agreement with another Business Broker,
  5. have the right to refuse to cooperate with other Business Brokers.

III. CO-BROKERING RELATIONSHIPS

Business Brokers should:

  1. obtain terms and conditions of Co-Brokering Agreements in writing,
  2. not advertise or market another Business Broker’s listing without prior written consent,
  3. obtain prior consent from the cooperating Business Broker before presenting any offer,
  4. disclose and/or provide material information including documentation, of which they are aware, to facilitate the transaction,
  5. keep each other informed about the status of the transaction on a timely basis.

IV. REFERRAL RELATIONSHIPS

  1. obtain terms and conditions of Referral Agreements in writing,
  2. upon request, agree to provide the Referring Business Broker the status of a specific transaction and notification of closing.

BBS-II STANDARD OF CONDUCT IN DEALING WITH CLIENTS

I. PREAMBLE

  1. In the interest of promoting a greater understanding and awareness of the duties and responsibilities of Business Brokers to their clients, this Standard shall serve as guidelines to be followed when serving as an Intermediary in the transfer of business ownership interests.
  2. For purposes of this Standard, a client is defined as an entity with whom a business Broker has a fiduciary relationship.
  3. The purpose of this Standard is to:
    1. define and describe the general guidelines for Business Brokers when dealing with their clients involving the transfer of business ownership interests;
    2. define the minimum responsibilities of Business Brokers to their clients.
  4. This standard is an integral and inseparable part of the General Preamble to the Business Brokerage Standards of the International Business Brokers Association.

II. GENERAL GUIDELINES FOR DEALING WITH CLIENTS

When dealing with clients, a Business Broker should:

  1. pledge to protect and promote the best interests of the client,
  2. perform all services with integrity, honesty, care, good faith and fair dealing,
  3. seek to obtain reliable information,
  4. maintain confidentiality of client’s proprietary information,
  5. obtain terms and conditions of agreements in writing,
  6. be willing to take the necessary steps to complete an assignment competently or decline the engagement.

II. DUTIES AND RESPONSIBILITIES

When dealing with clients, Business Brokers should:

  1. offer the client objective advice, opinions and recommendations,
  2. advise the client to make full disclosure, where appropriate, to prospective buyers of all information which may materially impact the transaction,
  3. conduct all negotiations on behalf of the client in good faith,
  4. keep the client informed of the status of all negotiations,
  5. work with client’s other professional advisors to structure a transaction in the client’s best interest,
  6. maintain a record of contacts with clients and customers,
  7. keep informed of trends in the transfers of business ownership interests such as: marketing techniques, national and local economic conditions, technological developments, financing methods and market values.

BBS-III STANDARDS OF CONDUCT WHEN DEALING WITH CUSTOMERS

I PREAMBLE

  1. In the interest of promoting a greater understanding and awareness of the duties and responsibilities of Business Brokers to customers, this Standard shall serve as guidelines to be followed when serving as an intermediary in the transfer of business ownership interests.
  2. For purposes of this Standard, a customer is defined as an entity to a transaction who receives services and benefits, but has no fiduciary relationship with the Business Broker.
  3. The purpose of this Standard is to:
    1. define and describe the general guidelines for Business Brokers when dealing with customers involving the transfer of business ownership interests,
    2. define the minimum responsibilities of Business Brokers to customers.
  4. This Standard is an integral and inseparable part of the General Preamble to the Business Brokerage Standards of the International Business Brokers Association.

I. GENERAL GUIDELINES FOR DEALING WITH CUSTOMERS

In dealing with customers, Business Brokers should:

  1. disclose whom they represent
  2. avoid exaggeration, misrepresentation or concealment of pertinent facts relating to a business or transaction,
  3. fully disclose all material facts of which they have knowledge which could affect the transfer of an ownership interest or the price being offered,
  4. advise customers to seek their own professional guidance from attorneys, accountants and other specialists.

II. DUTIES AND RESPONSIBILITIES

When dealing with customers, Business Brokers should:

  1. maintain a record of all contacts,
  2. obtain terms and conditions of agreements in writing,
  3. process all earnest money received according to the terms if agreements,
  4. keep customers informed about the status of their transactions on a timely basis, 5. return all earnest money according to the terms of the agreements, if an offer is not accepted.

BBS-IV STANDARD FOR BUSINESS BROKERAGE ADVERTISING AND PROMOTION

I. PREAMBLE

  1. In the interest of promoting a greater sensitivity, understanding and awareness of duties and among responsibilities of Business Brokers to the brokerage profession, clients, and customers and to the public good. This Standard shall serve as a guideline to be followed in the course of serving as an intermediary in the advertising and promotion of (a) their firms (b) for the business brokerage industry (c) the purchase, sale and exchange of business ownership interests; and (d) other business services.
  2. The purpose of this Standard is to define the minimum responsibilities of Business Brokers for establishing standards in advertising and promotion.

II. GENERAL GUIDELINES FOR BUSINESS BROKERS IN ADVERTISING AND PROMOTION

When advertising and promoting, a Business Broker should:

  1. Insure that any earning and other claims are based on verifiable facts;
  2. Insure that no subjective superlatives which tend to mislead are used;
  3. Insure that any testimonials or endorsements are truthful;
  4. Conform to the laws and legal regulations of governing bodies and agencies;
  5. Identify clearly the Business Brokering company or agency relation.

III. MINIMUM RESPONSIBILITIES OF BROKERS

When advertising and promoting, a Business Broker should:

  1. Assume responsibility for truthful and non-deceptive advertising;
  2. Be prepared to substantiate any claims or offers to inquirers prior to publicizing;
  3. Avoid untrue, misleading, deceptive, fraudulent, false or disparaging statements about competitors;
  4. Avoid misleading statements, about material facts about the Business Brokerage industry; professional certifications and client relationships.

BBS-V DOCUMENT RETENTION STANDARD I. PREAMBLE

  1. In the interest of promoting a greater understanding and awareness of the duties and responsibilities of Business Brokers, this Standard shall serve as guidelines in establishing and record retention policy.
  2. The purpose of this Standard is to define the category of the documents that should be retained.
  3. This Standard is an integral and inseparable part of the General Preamble to the Business Brokerage Standards of the International Business Brokers Association.

II. GENERAL GUIDELINES FOR RECORD RETENTION

The recommendations herein are subject to regulations promulgated by federal, state and local governments or other regulatory agencies.

  1. A business brokerage firm should establish a written policy covering documents to be retained and their retention periods.
  2. All personnel of a business brokerage firm should be given a copy of the document retention policy.
  3. Documents to be retained should include, but not be limited to, the following:
  1. Documents relating to closed transactions:
    • Listing Agreements and amendments
    • Correspondence
    • Recast financial statements
    • Marketing Packages, Business Profiles and related items prepared by the business brokerage firm
    • Advertising Copy
    • Buyer Profiles or Registration Forms
    • Buyer Nondisclosure Agreements
    • Appraisals of the business, machinery & equipment and/or real estate
    • Earnest Money Agreements, Letters of Intent and Offers To Purchase
    • Any Closing Documents prepared by and/or signed by the business brokerage firm
    • Telephone and Appointment logs
    • Any document prepared or signed by the broker or persons under the broker’s direction.

Revised January 14, 2005