When you’re en route to selling your business, you might have a broker contact you to offer their services or even have a friend suggest a business broker to help you sell your business. In either instance, it’s helpful to know what a business broker does so you know how they can benefit your business in the event of a sale.
In this article, we’ll cover what a business broker does and how to choose the right one for your business needs.
What is a business broker?
Business brokers can either run as individual agents or consultants, or they can function as a company; Lloyds business brokers are a good example of this. They have a team of brokers devoted to helping businesses sell, buy, or merge assets. Their main role as a broker would be to mediate the transactions between a seller and buyer of a business. Usually, the seller would work through the broker, and the broker would act as their proxy when dealing with investors or buyers.
What services do business brokers offer?
The reason many business owners use a broker is because of the benefits they bring to the table. For one, business brokers have a thorough knowledge of the economy. They know when it’s a good time to sell and when it isn’t. They’ll also tell you how to structure your business in the best way possible to get the best price when you sell it.
That said, business brokers can help make the sale or transition smooth and efficient, so you don’t have to be hassled by hectic amounts of paperwork and other issues.
They offer professional marketing and confidentiality
Business brokers who’ve been in the game for a long time will have a valuable network of contacts, most of which are investors and other businessmen. Having access to this network alone is worth it, as it can help you network your business and services, among others. Brokers are also adept at marketing a business sale while also maintaining confidentiality. By using discreet marketing methods, they’ll work through potential buyers till they’ve found the right candidate before releasing any confidential information to them.
They’ll negotiate the sale
The negotiation process in the sale of your business can be challenging. Usually, business owners who’ve built their businesses from the ground up struggle to let their businesses go for a price that’s below their expectations. This is understandable considering they’ve poured most of their life into building the business, but it’s not always realistic and could deter potential buyers.
Business brokers help bring a perfect balance between what you want for your business and what you can realistically get. They’ll also do their best to get closer to the figure you want for your business because they understand the effort that goes into building and running a business.
Selling a business with a broker
Selling a business is multi-faceted. There are so many aspects to consider, such as price, eligibility, legal requirements, and timing. Here’s a breakdown of how the process would work if you sold your business with a broker:
Start with a consultation
First things first, you’ll have a consultation with your broker. In this consultation, they’ll give you an overview of their services in the process of the sale, and they’ll ask you questions about your business to get an idea of what price you want and other aspects related to the sale. Once the services and fees are discussed and agreed upon, you’ll then enter into a partnership agreement with the company to give them authority to work through the sale on your behalf.
Determine a price for your business
Then, they’ll evaluate your business to see how much it’s worth in the current market. At this time, they’ll conduct earnings before interest and tax assessments to check your business profits and other operational aspects to determine a fair price for your business. To do this, they’ll need to do a thorough check of your financial statements, market conditions, and any potential growth opportunities your business might have to use as a selling point.
Create a marketing plan
Once they’ve got the fundamental work done, they can then get started on developing a marketing plan. During this part of the sales process, your broker will consider the confidential information that can’t be shared and organise their marketing plan around what can be used. They’ll market your business on their own platform to their network of investors, to whom they usually give preference first, and then from there, they’ll use other platforms for exposure as well.
Meet with buyers
Potential buyers will then touch base with the broker, showing their interest in the business. Your broker will create a list of buyers who’ve shown interest and then shortlist the most viable candidates based on their ability to purchase your business and the offers made. At this stage, they’ll also negotiate to get you the best price possible.
Do the due diligence and close the deal
As soon as a buyer accepts the offer on the table then the due diligence process will begin. This is when the confidential information of the business is revealed to the buyer. Things like your financial statements, how the business runs, and any legal issues that the business may be facing. If the buyer is happy and the due diligence goes well, then the sale agreement will be written up, and the business will be sold.
Final Thoughts
Having a business broker in your corner when selling a business is essential. If not just for their network of clients, then simply because they make the process smoother and easier for everyone.
