GLOSSARY
Selling Mandate / Listing Agreement
Contract between the owner and a business broker that authorizes the broker to represent the seller and run the sale process. Defines duration, scope, compensation, and the obligations of both parties.
Definition
The listing agreement is the formal engagement between an owner and their business broker. It sets the ground rules: what the broker will do, for how long, for what compensation, and what the seller commits to in return.
In French-language Quebec documentation, you’ll see mandat de vente used for the same concept.
Most listing agreements are exclusive — the seller agrees to work with that broker only for the duration of the engagement.
Why the listing agreement matters
The agreement protects both parties:
- For the seller: it spells out exactly what the broker commits to do, the budget invested in going to market, and the exit conditions
- For the broker: it ensures the work invested (often hundreds of hours) is compensated if a transaction closes
Key elements of a typical listing agreement
- Duration: generally 6 to 12 months, renewable
- Exclusivity: the seller can’t retain another broker in parallel
- Compensation: success fee (a percentage of the sale price, paid at closing)
- Tail clause: protects the broker if a transaction closes after the engagement ends with a buyer introduced during the engagement
- Upfront fees: some firms work on a success-only basis; others also charge a retainer or preparation fee
- Confidentiality: the broker’s obligations to protect sensitive information
What every seller should know
- Read the agreement in full — duration, tail, and termination clauses matter as much as the fee
- An exclusive engagement isn’t automatically a bad thing: it lets the broker genuinely invest in preparation and going to market, provided both sides’ obligations are clear
- Ask the question: “What happens if I want to cancel the engagement?” before signing