Why Should I Hire a Business Broker?
It’s more interesting to begin by asking: Can a business be sold without the use of a broker? The undisputed answer is obviously yes. Many businesses still sell through private parties.
Sellers hire brokers because they believe the broker will do a better job than they would. Knowing whether the broker you’re hiring has any practical experience and any success selling businesses in your area—that’s the hard part!
Key functions of a broker
Business valuation: Fair market value is what a willing buyer will pay a willing seller, period. Without selling a number of businesses in a particular area, a broker couldn’t possibly know what fair market value is for a business. Without this experience, it’s simply a theory. The right broker will know the value based on experience and work with local valuation experts to assist in the process.
Confidentiality: Brokers protect the seller and buyer in every possible way, even though the selling process requires the sharing of information. Using a good broker is the optimal way to ensure confidentiality.
Packaging and marketing: Quality brokers have the expertise and know what makes a business attractive to a buyer. They can, therefore, identify strong selling points for each business, which a seller might not have considered. After all, selling a business is just that… Selling! Packaging and marketing are critical to the successful sale of a business.
Finding prospective buyers: Brokers should be constantly marketing to buyers through websites, direct mail, phone solicitation, and networking. This results in a large database of interested buyers of all sorts.
Buyer qualification: Brokers screen prospective buyers in several ways. They obtain documents such as credit reports and financial statements, as well as interview buyers regarding credentials and experience. Sellers do not want to waste time with buyers who may not have the needed experience or are not serious buyers.
Consultation: A broker works with owners throughout the process regarding all aspects of the sale, including the terms of sale, financing issues, non-compete and other contract issues, customer retention, and whatever else is needed to make the process run smoothly.
Negotiations: Brokers provide important third-party negotiation skills to ensure that the deal gets done under terms that are satisfactory. This is one of the most underappreciated aspects of what a good broker provides and could fill an entire book of its own. This is where the broker either pays for himself or costs the seller money.
Financing: Successful brokerage firms have access and expertise in obtaining financing for the buyer so that the seller can receive cash at close if the business and buyer qualify. A broker can also provide guidance and valuable experience with regard to seller financing issues when necessary.
Large Pools of Buyers: It is simple Economics 101: Sellers can’t get the best deal from one or two potential buyers they met at an industry seminar. The larger the pool of potential buyers, the better the chance of getting not only the right price and terms but the best fit for your clients and staff.
There is a reason some brokers successfully sell many businesses each year, while others don’t. Some work hard and produce results while others merely list businesses and wait. Selling a business is not a simple process. It’s a complex, legally binding transaction with potential repercussions far into the future.
Read More5 Reasons Business Brokers Improve Closing Rates
It has long been a well-known fact that business brokers can help improve closing rates. In this article, we will take a closer look at the five top reasons why having a business broker on your side can make all the difference in the world.
#1 – They Reach the Most Buyers
What seller isn’t looking to reach more buyers? When more candidates are reviewing your business, the odds of selling for your desired price only go up. The simple fact is that business brokers reach the most buyers. In fact, they usually have a long list of prospective buyers waiting.
#2 – Business Brokers Know How to Navigate Negotiation Hurdles
As the old saying states, “there is no replacement for experience,” and this definitely holds true for business brokers. Business brokers know what it takes to circumvent negotiation hurdles. Their years of hands on experience means they can spot problems long before they occur, and this dramatically helps them to successfully boost closing rates.
#3 – They Know How to Present Your Business
Once again, experience matters. Business brokers specialize in buying and selling, and this means that they understand how to best present those businesses. Showcasing your business in the best light possible and working to eliminate weaknesses in presentation is a vital part of the sales process. Business brokers put their experience to work helping sellers achieve the best presentation possible.
#4 – They Stay Focused
Business brokers sell businesses for a living. You, however, by contrast have to worry about the day to day state of your business until all the paperwork is signed.
Additionally, since you are unfamiliar with the process of selling a business, you very well may become bogged down in the process; this is more dangerous than it may seem. Sellers who spend too much time getting involved in the “ins and outs” of the deal may accidentally start to neglect their own business operations. The last thing you want in the time period leading up to a sale is for your business to suddenly flounder.
#5 – Business Brokers Are Highly Invested in Your Success
Business brokers only get paid if your business sells. That means they too have a vested interest in your success. You can expect them to do everything possible to ensure that the sale of your business goes through.
Added together, these five factors help to explain why business brokers have historically enjoyed high closing rates. If you want to improve your chances of selling a business, don’t try to do it alone.
Read MoreWhy Should You Hire A Business Broker
It’s more interesting to begin by asking: Can a business be sold without the use of a business broker? The undisputed answer is obviously yes. Many businesses still sell through private parties. Sellers hire brokers because they believe the broker will do a better job than they would.
Key functions of a broker
Business valuation: Fair market value is what a willing buyer will pay a willing seller, period. Without selling a number of businesses in a particular area, a broker couldn’t possibly know what fair market value is for a business. Without this experience it’s simply theory. The right broker will know the value based on experience, and work with local valuation experts to assist in the process.
Confidentiality: Brokers protect the seller and buyer in every possible way, even though the selling process requires the sharing of information. Using a good broker is the optimal way to ensure confidentiality.
Packaging and marketing: Quality brokers have expertise and know what makes a business attractive to a buyer. They can therefore identify strong selling points for each business, which a seller might not have considered. After all, selling a business is just that… Selling! Packaging and marketing are critical to the successful sale of a business.
Finding prospective buyers: Brokers should be constantly marketing to buyers through websites, direct mail, phone solicitation, and networking. This results in a large database of interested buyers of all sorts.
Buyer qualification: Brokers screen prospective buyers in several ways. They obtain documents such as credit reports and financial statements, as well as interview buyers regarding credentials and experience. Sellers do not want to waste time with buyers who may not have the needed experience or are not serious buyers.
Consultation: A broker works with owners throughout the process regarding all aspects of the sale, including the terms of sale, financing issues, non-compete and other contract issues, customer retention, and whatever else is needed to make the process run smoothly.
Negotiations: Brokers provide important third-party negotiation skills to ensure that the deal gets done under terms that are satisfactory. This is one of the most underappreciated aspects of what a good broker provides and could fill an entire book of its own. This is where the broker either pays for himself or costs the seller money.
Financing: Successful brokerage firms have access and expertise in obtaining financing for the buyer so that the seller can receive cash at close if the business and buyer qualify. A broker can also provide guidance and valuable experience with regard to seller financing issues when necessary.
Large Pools of Buyers: It is simple Economics 101: Sellers can’t get the best deal from one or two potential buyers they met at an industry seminar. The larger the pool of potential buyers, the better the chance of getting not only the right price and terms, but the best fit for your clients and staff.
There is a reason some brokers successfully sell many businesses each year, while others don’t. Some work hard and produce results while others merely list businesses and wait. Selling a business is not a simple process. It’s a complex, legally binding transaction with potential repercussions far into the future.
Randy Hendershot 916.993.5433 ext 5
3017 Douglas Blvd, Suite 300, Roseville, CA 95661
randy@evobizsales.com www.evobizsales.com
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