What do they do and why turn to them?
What do Business Brokers do?
The principal role of business brokers is to act as a buffer between the buyer (Purchaser) and the seller (Vendor).
Business brokers can help a buyer to ﬁnd a business for sale or several businesses for sale that ﬁt the buyer’s parameters, includin location, industry and size. Business brokers charge the seller a commission which is based upon the purchase price.
Business Brokers can oﬀer assitance to buyers in several ways.
Pre-screening businesses for you
Good business brokers turn down many of the businesses they’re asked to sell, either because the seller won’t provide full ﬁnancial disclosure or because the business for sale is overpriced. Going through a business broker helps you avoid these bad risks.
Helping to analyse the buyer’s strengths
A good business broker starts by ﬁnding out about the buyer’s skills and interests, then helps to select the right business for sale for consideration. With the help of a business broker, you may discover that an industry you had never considered is the ideal one for you.
Assisting with paperwork
Business brokers know the latest laws and regulations aﬀecting everything from licenses and permits to ﬁnancing and lease assignment. They also know the most efﬁcient ways to cut through red tape, which can slash months oﬀ the purchase process. Working with a business broker reduces the risk that you’ll neglect some crucial form, fee or step in the process.
During the negotiating process is when a business broker really earns their keep. They help both parties stay focused on the ultimate goal and smooth over problems.
Business Brokers can offer assitance to Sellers in several ways
An experienced business broker can work with a business owner to prepare their business for sale. Often this is referred to as “Exit Planning Strategy”, and this sort of planning can make a huge diﬀerence to the outcome that a business owner achieves when selling a business. But it requires forward planning, and time to execute the plans. (see Exit Planning)
Statistics show that a business broker can sell a business for 20% more.
Then there are administrative issues. An experienced business broker knows what paperwork to ﬁle, and when to ﬁle it. They also co-ordinate eﬀorts between lawyers, accountants, bankers, landlords, franchisors and others.
A professional business broker will also ensure that news of the business for sale remains conﬁdential, that loyal customers, staﬀ, competitors, and suppliers ﬁnd out only when you’re ready to let them know.
When it comes to selling a business, ﬁnding the right buyer can be time-consuming and daunting if you try to do it yourself. A seasoned business broker can read the market, knows who’s buying what and who’s got resources, and can weed out the so-called “tire kickers” from serious buyers with sufﬁcient ﬁnancial resources.
It takes time to prepare the business for sale. An appropriate price must be set. All documentation needs to be prepared. A sale plan must be produced, and then the marketing plan. All of these things need to be in place before the business can be taken to the market.