10 reasons you should use a business broker when selling
There are many reasons why businesses are sold including;
- Design – the business plan from purchase or inception may have included the goal to sell in a specified timeline, or once certain objectives have been achieved
- Change of circumstances such as health, family or lifestyle
- A change in direction or passion
- Lack of capital or cash flow to grow or proceed
Whatever the reason for selling, and even if the business is not currently profitable, most businesses will have an intrinsic, direct or asset value and therefore a sale makes financial sense.
The decision to sell may be difficult or easy, quick or protracted, but once that decision is made it is essential to approach the sale as professionally as possible in order to reach your intended goal whether that be;
- speed of sale
- maximum profit; or
- a combination of both.
Much like selling a home, your business likely to be one of the largest sales you will attempt. It is also highly likely that you will not be an expert in business sales, in which case, you should certainly turn to a specialist business broker.
Following are ten compelling and measurable reasons to use a Business Broker in the sale of your business.
Business brokers are literally in the business of selling businesses. They are experienced in valuation, negotiation, mediation and sales. They understand the business of business.
Brokers understand the benchmarks and the key performance indicators across industries and are able to apply these and other industry patterns to your business to positively influence your sale.
Whether you’ve sold multiple business in the past or whether this is your first business sale, it is likely that selling businesses is not your principle skillset. It is, however, the principle role for a business broker.
Expert business brokers will have years of experience behind them. They would have seen and experienced “the good, the bad and the ugly” sides of a business sale and therefore be well positioned to advise you on process, valuation and strategy.
Experienced business brokers are adept at handling the whole process from start to finish, as they have done this many times before. One of the key skills in developing a strategy is understanding what type of buyer you are looking for, and how to find them.
There are also legal and regulatory processes that must be handled, information to be gathered from third parties such as accountants and lawyers, and a sales memorandum to be developed.
Therefore, a more systemised and honed strategy will give you a more streamlined and effective sales process. By utilising an expert to help develop and execute your strategy, you are far more likely to achieve your desired outcome.
Not only will a good broker know the most effective channels to market your business, but they know which platforms and campaigns types will be best suited to your business. Bottom line, the more enquiries you get, the greater your opportunity and an experienced business broker will give you a vastly greater, and more targeted exposure that you can achieve on your own. They have many previous clients, and an active database of interested buyers that are pre-qualified and looking to buy. They will also have access to industry databases and be able to engage strategic buyers at arms’ length that will enhance your negotiating position.
Not only is it likely that the sale of your business is one of the biggest sales you’ll ever make, it is also very likely that it will be one of the most emotional. Pride in one’s business and the knowledge of the hard work to operate and build the business can sometimes create limitations, blocks and unnecessary complications in the business sale.
A business broker is a third party who has your back as well as a vested interest in the successful sale of your business. Their clarity and objectivity during the sale could mean the difference between a sale, and a sale beyond your wildest expectation.
Just like you would have built valuable and trusted networks in your business and your industry over the years, so too has an experienced Business Broker. The value of their networks and the knowledge and experience they share could be priceless in terms of your business sale.
Experienced business brokers will already be working with trusted professionals in accountancy, finance and law so you will not have to worry about sourcing these during your business sale.
Selling a business is a hugely time consuming process. Long before the negotiation or purchase period takes place, there will be time taken to ascertain the genuine buyers from the list of interested parties. If you are working full-time in your business and are responsible for its sales, marketing, staff revenue and profits, it is unlikely that you will have the time available to screen potential purchasers, to provide all of the necessary information and to be available as and when likely purchasers need information.
An experienced business broker will have all of the systems required to handle these tasks on your behalf thereby leaving you to get on with what you do best – running your business.
By using a third party such as a business broker you can remain entirely anonymous throughout the entire sales process.
Your business broker can act on your behalf in any or all negotiations after consultation with you so that the purchaser never need have your direct details. This can vastly assist your stress, objectivity and emotional state throughout the sales process.
In most cases, it is likely that the business owner/s would like to keep a likely sale quiet before the deal has been done.
They may not wish for competitors, suppliers or in some cases, even their employees to know of the sale. The business can be listed by the business broker on your behalf and details such as the name of the business are often withheld until genuinely interested purchasers have been identified, qualified and signed a confidentiality agreement.
Although it will cost money; either in commission or up-front fees to hire and work with a business broker, the combination of the 9 points will lead you to a more accurate and higher valuation than you probably first thought and therefore a higher sale price.
In some cases, a Business Broker may be able to recommend different structures or pathways to sell your business that you didn’t realise even existed. This is where a quality broker really earns their money.
The old adage of “if you pay peanuts, expect monkeys” is very true in business broking. To embark on a business sale without the advice and support of an experienced business broker could cost you far more in the final sale price, and cause significant emotional stress.
Business Brokers and Expert Business Brokers
Please remember – like all industries, not all business brokers are alike. There are business brokers who will competently “do the job” and sell your business to an interested party for a result
Then there are those who are true industry experts who will assist and advise you long before the sale to streamline all of your accounting, financial, sales, marketing and human resource systems and processes. Streamlining your business will ensure maximum return on your sale with the least possible stress and disruption to you, your business and your staff.