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This Code of Ethics is the most recently enacted Code of Ethics of the IBBA by its Board of Governors and replaces any previous versions. This Code of Ethics is for use by all business brokers and abided by Members of the IBBA as a means of establishing uniform ethical practices when providing business brokerage services. While the Code of Ethics establishes obligations that may be higher or different than those mandated by law, in any instances where the Code of Ethics and the law conflict, the obligations of the law must take precedence.
Business brokers and IBBA Members must strive to support entrepreneurship, and the concept that the investment risks of owning a business deserve a straightforward, professional and honest presentation to both seller and buyer. This Code of Ethics imposes obligations beyond those of ordinary commerce. Business brokers, and specifically Members of the IBBA, must strive to be zealous in maintaining and improving ethical practices and sharing with their fellow business brokers and Members a common responsibility for integrity and honor in their business transactions. In recognition and appreciation of their obligations to clients, customers, the public, and each other, business brokers must continuously strive to become and remain informed on issues affecting the sale and purchase of businesses and be willing to share their experience with others. Business brokers and Members must strive to eliminate practices that may damage the public, clients, customers, and industry/profession, or which might discredit or bring dishonor to the business brokerage profession. Business brokers must strive to urge sole and exclusive representation of clients, not attempt to gain any unfair advantage over competitors, and refrain from making unsolicited comments about other practitioners. Business brokers must strive to observe the spirit of this Code of Ethics in all activities and to conduct their business in accordance with the tenets set forth below:
Business brokers must endeavor to comply with all laws within jurisdictions in which they practice.
Business brokers should keep themselves informed of the trends, best practices and changes affecting business brokerage services.
Business brokers must strive to avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to properties and business transactions; however, nothing herein must be construed to obligate business brokers to discover latent defects, advise on matters outside the scope of their expertise, or disclose facts that are confidential under the scope of agency duties owed to their clients.
Business brokers must make a reasonable effort in a transaction to protect the public and all parties against fraud, misrepresentation(s), or unethical practice(s) in the area of business brokerage, and/or business transactions. Business brokers must strive to not make false, misleading or exaggerated claims about themselves, their firms, franchisors (where applicable) or their competition.
Business brokers must strive to encourage customers and clients to seek the services of qualified attorneys, accountants, or other professional advisors when applicable. Unless appropriately licensed, business brokers must not undertake to provide professional services without required licensure including, but not limited to, legal, accounting, tax, financial planning, and/or real-estate where doing so would be a violation of law in the jurisdiction in which the broker(s) practice(s).
Business brokers must keep in a separate bank account, apart from their own funds, monies coming into their possessions in trust for other persons. Where such holding of trust or escrow funds is governed by law, or regulations under explicit licensures, business brokers must strive to adhere to said laws or regulations.
Business brokers must strive to obtain terms and conditions of agreements in writing regarding business listings, agency relationships, or business transactions, and ensure that copies of such agreements are given to all parties involved and where applicable, in accordance with the respective laws, rules, regulations and jurisdiction.
Business brokers, in accepting employment as agents, must endeavor to pledge to protect and promote the interests of their clients. This obligation of absolute loyalty and honesty to the client’s interest is primary, but it does not relieve business brokers from the obligation of dealing honestly and fairly with all parties and/or in accordance with higher fiduciary duties as required within a relative and/or applicable jurisdiction.
Business brokers accepting compensation from more than one party, where such is allowed by law, must endeavor to make written disclosure to the principals of the transaction and/or in accordance with applicable laws, rules and/or regulations within a relative and/or applicable jurisdiction.
Business brokers must endeavor to disclose, and receive consent to, and by, all parties of a dual agency relationship, or a limited dual agency relationship or a designated agency relationship, in writing and or as required by the law of agency within the relative, and/or applicable jurisdiction.
Business brokers having a present or contemplated personal or non-arm’s length interest concerning a business or a property, or their respective value, must endeavor to disclose in writing such interest to the principals of the transaction.
Business brokers, acting as an agent, accepting any commission, rebate, fees, or profit due to expenditures made on behalf of the principal, must endeavor to disclose in writing and obtain consent in writing from the principal.
Business brokers undertaking to provide specialized services concerning a type of business or property or a service outside their field of competence must endeavor to disclose such deficiency or facts, and/or as appropriate engage the assistance of one who is competent in such types of business or property or service. Any persons engaged to provide such assistance must also endeavor to be so identified to the client or customer, and their contribution to the assignment must be set forth.
Business brokers must strive to only advertise businesses as being for sale when they have written authority to do so. All offerings or promotions of businesses for sale must reflect the terms consistent with those of a written agreement with the client or customer.
Business brokers must strive to submit all offers, written or verbal, to the client unless otherwise directed by the client, or as required by laws, rules or regulations of the relative and/or applicable jurisdiction.
Business brokers must not disclose the terms of one buyer’s offer to any other buyer.
Business brokers must endeavor to adhere to the anti-discrimination laws in force in the jurisdiction(s) in which they practice.
The business broker must refrain from continued and prolonged association with individuals or organizations which act in a manner contrary to this Code of Ethics. Such continued association is deemed as denial of this Code.
