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, including location, industry and size. Business brokers charge the seller a commission which is based upon the purchase price.
Business brokers can offer assistance in several ways
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 or simply not in a condition to be sold. Going through a business broker helps you avoid these bad risks.
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.
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 selling or buying process. Working with a business broker reduces the risk that you’ll neglect some crucial form, fee or step in the process.
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).
Importantly, statistics show that a business broker can sell a business for 20% more than .
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.
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.