(1) If
a "business broker" as defined in subsection (2) below is involved in the sale
of a business that results in a securities transaction, the business broker is
exempt from registration as a broker-dealer and the agents for the business
broker are exempt from registration as agents of the issuer if all the
following conditions apply:
(a) In marketing
a business, the business broker only advertises to potential buyers that the
"business" is for sale;
(b) The
business broker does not advise either the buyer or seller that the transaction
be completed via a sale or purchase of securities;
(c) If the decision is made to conclude the
sale of the business via a sale of securities, the sale is made by the buyer
and seller or their advisors without the business broker's advice;
(d) After the time, if any, the decision is
made that the sale transaction is a securities sale the business broker then
has a limited role in the negotiations between or among the parties and merely
facilitates the transmittal of information or documents between the buyer and
seller, or their advisors;
(e) In
no event does the business broker have the authority to make binding agreements
on behalf of any party to a securities transaction;
(f) The business broker does not assess the
value of any security or equity interest to be sold, but may assess the total
value of the assets or the business to be sold as a going concern;
(g) The business broker does not assist the
buyer in obtaining financing.
However, the business broker may provide uncompensated
introductions to lending sources that the buyer may consider for the
transaction. The business broker also may help in completing the paperwork
associated with the loan applications for the buyer in order to assist in
completing the transaction;
(h) The compensation to be paid to the
business broker does not change regardless of the manner in which the sale is
concluded (whether asset sale or the sale of securities);
(i) The business broker always advises
potential buyers that the business broker does not and may not verify the
information given to the business broker about the business;
(j) The business broker also advises
potential buyers that the business broker does not make any representation
about the accuracy of the information provided regarding any aspect of the
business;
(k) The business sold is
not a "shell" entity;
(l) The
business broker does not handle the transfer of funds from the buyer to a
seller, but may accept earnest money from a buyer for deposit with a third
party escrow agent; and
(m) The
business broker is always subject to the anti-fraud provisions of all state and
federal securities acts.
