Do I Need to Hire A Business Broker to Sell My Business?
A lot of business sellers struggle with the decision to hire a business broker. Most of the time, they wonder whether hiring a business broker is worth it, and if they do, how can they save on their fees? While saving money is the number one priority for most business sellers, always remember that selling a business for its true value is a long and complex process. A business broker is a professional with immense experience in selling businesses and ensuring that sellers get the best value for their business. In this blog, we’ll discuss who are business brokers and whether you need to hire them.
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Who Are Business Brokers?
A business broker is a professional whose main role is to help you sell your business at the desired price. Their main job responsibilities include finding a great buyer for your business, negotiating a sale price that’s favourable for both parties involved, and helping to close the deal within the desired time frame.
Brokers are sometimes called merger and acquisition (M&A) advisors as they have immense experience in selling companies, and many brokers have even sold their businesses as well.
This makes it hard for sellers to choose the best business broker who is truly qualified to help them sell their businesses. Hence, below in the blog, we’ll also discuss factors to keep in mind when choosing the right business broker.
Why Should You Hire a Business Broker?
Business-selling expertise
A business broker’s experience can prove invaluable when you are looking to sell a Business. At every stage of the selling process. As every business selling process is unique, so are the tactics and strategies to deal with it—business brokers with a proven track record of evaluating and selling the business in different industries and markets.
Different brokers specialize in different industries and have a thorough knowledge of industry-specific legal structures and operations. Hence, you must carefully evaluate the type of experience business sellers have while hiring them. Take time to familiarise yourself with the specific niche.
Thus, it’s wise to choose brokers who have the following qualifications:
- Certified Business Intermediary (CBI)
- Mergers and Acquisitions Master Intermediary (M&AMI)
- Certified Mergers and Acquisitions Professional (CMAP)
Avoid Delays
Time is the primary reason why sometimes even a good deal gets cancelled. The best tip is to collect all your financial data, tax returns, and other crucial data to get ahead of the game. This is where hiring a broker can help, as a broker never puts a company on sale until all of his information is ready.
Potential buyers can be very demanding, as they have to be doubly sure of the business they are buying, as a lot of their money is going to be involved. A broker can help you deal with the demanding phase of the buyer and avoid time delays. They help both parties come to a common conclusion that is typically favourable for both.
When it comes to selling a business, a broker will always look at your business from the buyer’s perspective. What information do you need to analyze a business? Most buyers check three to five years of financial records. It includes profit and loss statements, balance sheets, accounting statements, and any other information you can think of.
Ability to find real, qualified buyers
For many business owners, their business is their main source of livelihood. You deserve a fair price for your business, but if it’s too high for a small business, you won’t attract many buyers and might even sell it at all.
Business valuations can be a tough process for small business owners because they involve a lot of variables, which include the business’s assets and the seller’s discretionary earnings (SDEs), and these factors can vary depending on the business industry and operations.
Business brokers can accurately evaluate and price the business using pricing strategies based on the true business value and one that appeals to potential buyers.
In many cases, business brokers successfully increase the overall value of the business before its sale by suggesting the required improvements. They have extensive knowledge of what’s happening in the current market and can help in forecasting trends to optimize the timing of the sale.
Business brokers can successfully find prospective buyers, separating the serious ones from the ones wasting your time; thus, they can help keep the sale confidential and have potential buyers sign non-disclosure agreements.
Expertise in negotiation
Knowing the art of negotiation is highly crucial; however, a seller should know this art to get the best deal for themselves. A lot of sellers are also driven by personal reactions and emotions, which can overpower them during selling. This is where quality Business Brokers, who are expert negotiators, come to your rescue.
Instead of wasting time and energy searching for the best purchase price, a business broker can help you complete the process quickly and negotiate the best price for you. They have access to recent sales histories in the industry to determine an unbiased assessment of the business. Brokers can facilitate negotiations and do background research on any buyers to ensure they are getting the best deal.
So, Is Hiring a Broker Worth It?
There are a lot of factors you need to consider before hiring a business broker; however, in most cases, hiring a business broker is highly recommended. Brokers are experts who are experienced professionals who make the overall process hassle-free, fast, and efficient.