Even the most successful business owner, who knows their firm inside out and has been running it at a profit for years, may be at sea when it comes to putting their business up for sale.
Why use a business broker?
This is an area of specialist knowledge, and many owners are happier hiring a specialist to deal with the sale. Bringing in an expert may not always be the right move, however.
A competent professional can be a great asset to a sale, bringing everything you need to make your business an attractive proposition and to conduct the deal smoothly. Their knowledge of the trade will allow them to make an accurate valuation, and their knowledge of the market, plus their contacts, will help find potential buyers.
Their familiarity with each step of the procedure means that a deal can be closed quickly. They will know exactly what needs to be done at every stage, and will have the paperwork to hand. Acting as a negotiator between buyer and seller to reach a conclusion that pleases both parties, they can save you not only time but potential conflict.
Finding the right broker
One problem with hiring a professional is that finding a good one can be something of a lottery, since there are few formal qualifications involved. Word of mouth is usually the best way.
The most obvious drawback is, of course, the cost of employing a specialist. As well as their fee, a broker will charge commission on the sum you eventually receive for your business. For smaller businesses, which will sell for less money than a larger enterprise, this loss can be a significant amount.
It is also important to remember that the broker may put their own interests above yours. You might assume that the higher the sale price, the better it is for the broker, but this isn't always the case. Any sale is better than no sale, and a quick sale is better than a slow one, so your broker may push you to accept a lower price than you would like.
When deciding whether to employ the services of a broker or other expert, you should ask yourself honestly if you have the knowledge, skills and contacts to manage the sale yourself. If you have time in hand before starting the process of selling your business, you may decide to teach yourself the skills required, especially if you think they will come in useful for the future too.
It may be that you will not receive as much for your business if you sell without the help of a professional, but saving yourself a broker's fee can counteract the loss. When weighing up the relative costs of selling with or without a broker, don't forget to factor in the time you will spend arranging the sale - time which could be spent looking after your business.
Consider your brokers track record and professional credentials. Are they a member of the International Business Brokers Association (IBBA)?
When you first meet your broker, ask them about their approach. Discuss how they plan to identify buyers and ask what questions they intend to ask. The best brokers will interview buyers for a couple of hours to get rid of time-wasters and ensure only the most qaulified make it to the later stages.
Make sure that your broker understands that they are representing your interests and not the buyers. As well as facilitating the deal, your broker should do everything in their power to help you achieve the best possible price. If they don't, look for someone else.
Understand that the success of the sale will be influenced by your relationship with your broker. Remember that it is a two-way relationship and each of you should feel comfortable to speak openly and honestly.
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