New licensing toughens broker requirements

As so happens, Jerry Golanty says, it all came down to the tiniest details.

Golanty, a veteran business valuation expert in Reno, was one of a half dozen experts hired to help develop Nevada's new licensing test for business brokers.

After creating questions in specific disciplines analysis of financial statements, for instance, or negotiating strategies the panel got together to grade the questions.

How many test-takers, panelists were asked, would be likely to correctly answer the question? If the question was too difficult, it was tossed. So were questions that were too easy.

The test developed by Psychologial Services Inc. of Burbank, Calif., under contract with the Nevada Real Estate Division, is one of the big hurdles that business brokers will need to clear in the new licensing program.

Licensed real estate salespeople who want to broker business are now required under state law to complete 24 hours of training courses and pass the test administered by the California firm.

Before the licensing requirement was approved in the 2005 session of the Nevada Legislature, any licensed real estate agent could buy and sell business without any spe-cial training.

That, Golanty says, led to lawsuits and fouled transactions.

"I've seen purchase agreements for businesses where they used the same fine print they would use for the sale of a house," he says.

And traditional schooling for real estate agents, he says, didn't include any preparation for the specialized business of business brokerage.

Nevada is one of a small number of states that are licensing business brokers, although the idea is spreading through the United States, says Maurice Desmarais, president of the Chicago-based International Business Brokerage Association. (By coincidence, the group plans a major national conference ni Reno in November.)

State real estate officials discovered the intricacies of business brokerage as they started writing regulations to cover the new licensing requirements.

"It's a whole different animal," says Susan Clark, licensing manager for the real estate division.

Under the new regulations, real estate salespeople who have been licensed by the state since October 2005 and who have been brokering business sales since then won't have to take the 24-hour training class.

They do, however, need to pass the exam before the end of the year.

Newcomers to the field will take the class and the test before they're issued a license.

State officials don't expect a large wave of applicants for the business-broker license, but they don't have a good estimate on the number of professionals working in the field. In northern Nevada, Golanty estimates about 15 people are likely to seek licensing.

State law requires that real estate salespeople work under the supervision of a licensed real estate broker. Salespeople who earn licensing as a business broker still will need to work under a licensed real estate broker, Clark says.

Even though Golanty's experience in business brokerage gives him a pass from taking the training course, he still needs to take the licensing test that he helped to create.

"I'd better pass," he says with a laugh.