Why you should use a business broker to sell your company

Once you have decided to sell your business, one of the biggest questions to be addressed is whether or not to sell it yourself or use a business broker. There are valid points on both sides of the argument and a lot depends upon your particular situation. Many business owners wonder "why use a business broker?" and prefer to sell their business on their own. However, the reality is that this is a complex, time consuming, and difficult process. Handling all aspects of a business sale by yourself can be a daunting task. In addition, the risks involved with the sale of a business, such as legal and financial problems, can be significant. A business broker has the experience to help you to sell your business. Business Brokers understand the industry and have been trained to represent your company and get the best possible price. A good business broker can act on your behalf and can successfully guide and execute the sale of your business. If you don't have experience selling businesses a business broker can substantially increase the odds of a successful transaction on favorable terms.

What does a business broker do?

A business broker acts as an intermediary. They usually act as an agent of the seller, and by bringing the parties together, the broker helps to generate the best sale price for your business. A business broker offers the following services: creating marketing materials to present the business in the best light possible; marketing and advertising the business; persuading a buyer to make a reasonable offer for the business; negotiating on the seller's behalf; dealing with potential buyers (and "tire kickers"); shepherding the due diligence process, and keeping the transaction on track. A seller will get more value for their business, they will have more control over the sale, and they will be more confident about the process when using a broker.

Why use a business broker as an intermediary

Business brokers are experts and have been through the legal process of buying and selling businesses many times. They are there to help you as a business owner with the process of selling your business. can also provide advice on financial matters, tax, legal and marketing aspects of the sale of your business.

When you choose to sell your company, you want it to be done as quickly, confidentially, and painlessly as possible. Business brokers will help you to value your business, set a reasonable price, and also collect the needed documentation, including financial statements, tax returns, and other confidential information needed for due diligence. Using a business broker will save you time since your first priority should be to keep the business running profitably.

Effective Pricing Gets Your Business Sold

If you are considering selling your business, the pricing is important to consider. By pricing your business appropriately, you will increase your chances of a quick sale. A business broker can help you adjust your price to help you reach a quick sale. A broker can also tell you what is a reasonable price for the market. With a good broker, you will know how to set a competitive price for your business and get the maximum dollar. If you are not sure about what this "competitive price" is, it can be helpful to consult with a professional like a business broker to take some of the guesswork out of the process. Setting the price too high can result in few potential buyers looking at the business where a price that is set too low can leave money on the table.

Using a Broker Saves You Time

There is a substantial investment in time and energy in selling a business. A broker will create marketing materials, advertise the business, handle inquiries from potential buyers and screen out the obvious time wasters that just want to get a look at the business but never really intend to buy.

Lack of Confidentially Can Kill a Deal

One of the biggest benefits of using an intermediary is that the sale of your business will not be publicly disclosed. Selling a business is not like selling real estate, you don't want to put a "For Sale" sign in the window. Once your competitors know your business is for sale, they will use it against you in sales pitches. Once your employees know you are selling they may get nervous about their jobs and start looking around. Once your suppliers know you are selling, there goes the discount for anticipated future orders. If you are selling the business yourself, it is almost impossible to keep it a secret.

Getting the Due Diligence Done

Due diligence is another one of those things that can derail an otherwise good deal. A good broker will help you gather the documentation needed ahead of time so that your buyer will have confidence that you are organized and prepared. A good broker will also preview the information to make sure that there is nothing that will be a surprise to the buyer. If something is found, it can be disclosed during the sales process. There is nothing the can ruin a deal more surely than the buyer being surprised by discovering an undisclosed problem after the offer is made and the negotiations have ended.

Other benefits of using a business broker as an intermediary

The broker will assist you in selling your business in a number of ways. Business brokers assist you in getting an offer from a buyer - it is easier and less awkward for a broker to push a potential buyer to make an offer than for the small business owner. Without that initial offer, there is no place to start the negotiations. For businesses that have a good working relationship with their broker, a business broker will act as a professional sounding board that is available for you to use to ask for advice. The business brokers will also be in direct and regular contact with the buyers and can keep an owner informed about the status of any offers or negotiations. They can check with your buyer if there has been any new development with regards to the deal.

Most business brokers offer a free initial consultation where you can learn about the sales process and get some idea of the potential for the sale of the business.

Reasons not to sell your business yourself

A business broker can save you from a lot of stress and potential pitfalls, by not only steering you towards the best opportunities but also suggesting the right time to sell your business. You may be worried that the right offers aren't coming in, so you keep it on life support. Business brokers are proactive and by monitoring new developments they will be aware of a business's worth and will push for a sale at the right time. If you try to sell your business yourself, the sales process will take longer and involve a lot of work to which will take you away from managing your business.

How much does a business broker charge?

A business broker in the main street and lower middle market segments will charge a fee which is a percentage of the sale price. This percentage of sale can vary depending on the size and value of the business, type of business, and the scope of the work. He will work with you and your team to ensure that the sale is as beneficial as possible. A reputable business broker will charge in the region of 4-10% commission on businesses with an enterprise value under $5 million. The smaller the business, the larger the percentage commission usually is. Many brokers have minimum commissions for very small businesses.

How Can You Find A Business Broker?

The best way to find a business broker is to get recommendations from someone who has used a broker before. Your account or attorney may also be able to recommend a broker. The International Business Brokers Association maintains a website with listings of its members (https://www.ibba.org/find-a-business-broker/ ) and has a number of resources to help evaluate brokers.

Conclusion

Let’s face it, you are the owner of your business, you know what’s going on behind the scenes. Your business is probably doing well and producing a profit for you, but that doesn’t mean you should sell it without a professional to do the job for you. A good broker can help you sell your business for a better price, more confidentially, and faster than you can without professional assistance.