Selling a Business? – 10 Reasons Why You Should Consider Using a Business Broker

After 20 years in business the owner decides that it is time to sell his business. He thinks about calling a business broker, but decides to sell it on his own and save the fee that he would have to pay a business broker. Is this a good decision? I think if you interviewed the majority of owners who have attempted to sell their business on their own they would tell you that this is was necessarily the best decision. As a business broker I can tell you that close to half the calls I get are from business owners who attempted to sell their business and realized it is best to leave such an important task to a professional.

I can also tell you that if you interviewed the majority of my clients they would tell you that I must be out of my mind to be doing this for a living. Once they go through the process and see what it takes for a business to successfully change hands they have no problem what so ever signing my commission check at the closing. Let me give you ten reasons why my clients will tell you that if you are seriously considering selling your business you must retain an experienced knowledgeable business broker:

* Time Savings – Most business owners spend the majority of their business day managing their businesses. Selling a business is what business brokers do full time. Qualifying and working with buyers is a time consuming tedious process. An owner will have to make a compromise in the time that they normally dedicate to running their business.

* Experience – A broker has the knowledge and experience of selling businesses. Having this on your team will only increase the chances of getting the most value for your business and making it to a closing.

* Realistic Valuation – It is my experience that most business owners feel their businesses are worth a lot more that what the market dictates. When one goes to market at a price that is too high they risk losing many qualified buyers. This will also increase the time it takes to sell their business. In some cases an owner will price their business too low forfeiting dollars on their selling price. An experienced business broker will perform a market valuation so the asking price is realistic.

* Marketing expertise – A good business broker knows where to and how to advertise your business. They have databases of buyers of which many might be looking for a business like yours. They also proactively know where to find buyers that might not be looking at your ads.

* Financing – The majority of business sales involve some sort of financing. Very few buyers are all cash. A good business broker has banking contacts that will enable deals to get financed. They also can advise you about seller financing.

* Negotiations – In every transaction there are negotiations. Negotiating on your own behalf is similar to the saying “a lawyer that represents himself has a fool for a client.”

* Buyer experience – Most business buyers are first time buyers and do not have experience. A good business broker works and nurtures their buyers to make sure they make it to the finish line and close. They help them obtain financing and facilitate due diligence.

* Confidentiality – Most business owners are very concerned about confidentiality in a transaction. They do not want their employees, customers, vendors, and competitors to know they are up for sale. An experienced business broker is accustomed to taking all precautions in keeping the sale confidential.

* Closing deals – I always tell my clients not to get excited when I bring them an offer that they are pleased with. A good business broker earns their stripes getting a deal from accepted offer to a successful closing. So many obstructions present themselves during this process and a good broker will constantly be thinking creatively to move deals along to the finish line.

*Business brokers work for free – That’s right, most business brokers work on 100% commission so if they don’t find a buyer they do not get paid. Do you know a lawyer, accountant, or a consultant that will work on your behalf and in some cases for up to a year and possibly not get paid?

Selling a business is the most important decision many entrepreneurs make in their lifetime. Their companies in most cases represent the bulk of their net worth as well as the majority of their retirement savings. Is it really something they should risk by trying to sell on their own?

Some Resources For Finding a Business Broker

Before we talk about resources for finding a business broker, let us first understand who is a business broker. Business broker resembles very much to the real estate agent. The job of the business broker is to bridge the gap between the buyer of the business and the seller of the business. If you wisely choose the right business broker, you can save a lot of money in the business transactions taking place through him. Here are some resources for finding a business broker for you.

Ask the People Whom You Already Know For Referrals:
Whenever we look for something that is new to us and we are not familiar with it, we try to gather information from the people we already know, and have faith in them that they would not misguide us. Same procedure we can apply when we look for the resources for finding a business broker. Take the advice of your business associates, accountants, lawyer and other associations of the industry to get the names of business brokers. If a reliable person gives the reference of any business broker then there is no harm in considering him for hiring his services.

IBBA:
Another very good resource for finding a business broker is the International Business Brokers Association or IBBA. This is an institute of business brokers working on non-profit basis. There are approximately one thousand three hundred members of this association.

Go Through the Advertisements in Newspapers:
One very good resource for finding a business broker is newspaper. Look for the advertisements under the business opportunities. You should check local, regional and national all types of newspapers for this purpose. You will observe several businesses for sell in these advertisements. Although, these advertisements are intended to attract prospective buyers yet you can check them to find out the names of the people who are managing these deals.

Yellow Pages:
Another resource for finding a business broker is to look in the yellow pages. However, do not get confused with the real estate agents and look specifically for the brokers who have experience in the selling of businesses. Any broker who just lists the name of your business on the multiple listing services is of no use to you. These kinds of brokers do not give required time to make such business deals.

Sign an Agreement After You Have Selected the Business Broker:
After your search for finding a business broker ends and you succeed in finding the right business broker, sign an agreement with him. State clearly in the agreement that what type of marketing strategy the business broker will adopt to sell your business. Do not forget to mention that any such advertisement must not carry the name of your business.