Are you looking to sell your business? If so, you’re not alone. Every year there are over four million businesses sold in the U.S. Most of the businesses are small to medium level businesses. And unfortunately, some are sold well below their value, while others are sold to buyers who are unable to fit into the company culture, which leads to loss of business.
The problems of trying to sell your business alone…
Some business owners are able to sell their businesses without any professional assistance. However, a bigger number are trapped in a myriad of problems when looking for a suitable buyer for their business.
Unlike selling products and services, you always look for the best buyer when you need to sell your business. Depending on your industry, you may receive multiple offers; but sometimes the highest bidder is not always the best buyer. When it’s time to sell your business, you may be torn between a buyer who offers cash at close, and the one that offers a higher bid but with some seller financing. You also have to decide if you would like to exit quickly, or remain for some time.
Other issues that are of great concern are your employees and their futures; the ability of the seller to build the business from wherever you left it, trust issues, and business valuation among others. A business broker may help you out of these dilemmas, and offer many more services to help you sell your business.
Who is a business broker?
A business broker is an intermediary that assists either party in the sale of a privately held business. The seller’s broker becomes the principal’s agent in the transaction, while the buyer becomes his client. Many business owners do not know where to start when they decide to sell the business. Hiring a business broker is your best bet in helping you sell your business right. Here are ways that a broker would help you sell your business…
Giving the right value to your business is a hard task. Several factors that come into play can make the process complex. Unlike property such as a house, the broker looks at several variables when coming up with the actual value of the business. The broker looks at the assets, the customer base, market penetration, transaction history, and the market forecast when coming up with the price tag.
The business may be doing well at the moment, but the future may not be that bright. Alternatively, the market might not be so good now, but there may be several promising opportunities in the future. The broker juggles with such when looking for the most appropriate price tag. With a broker at hand, you are more likely to sell your business at its actual value.
Listing the business for sale.
As a business owner, you may be limited about the avenues available for marketing your business, except for print media, and a few online business sites. In contrast, a broker has the resources and access to tools that help him locate a large base of possible buyers for your business. In addition, the broker actively markets the business among the buyers in a bid to create interest. The higher the visibility of the business among the potential buyers, the more likely you are to get a qualified buyer and sell your business fast.
Qualifying the buyers.
Several buyers may show interest in your business. The broker creates a criterion for which to qualify the potential clients. Some of the variables used include the offered price, the right cultural fit, and agreeable terms of buying among others. Qualification processes help get buyers that best fit your business industry. In order to protect the business publics and ensure continuity, the price is not the only variable that is used to get the right buyer.
Handling the paperwork.
Just like the sale of property, when it’s time to sell your business, several documents exchange hands during the sale. The seller’s broker receives an offer from the client and responds by sending a comprehensive information Memorandum to the client. The 15 to 20-page document details the principal business trade, assets, market, and licensing, among other areas. He then prepares a draft agreement stating the terms of sale, and the price of business. He or she also responds to inquiries from the buyer or his agent, drafts, and ratifies the final sales agreement on behalf of the seller.
Confidentiality of the transaction.
Unlike property sales, if a business advertises that it is on sale, there is the likelihood that it would lose its customers and many other publics, such as the employees, and suppliers who will shy away from working with the firm. Thus, confidentiality is essential during the process of selling your business. In the first stages of the sale, the broker contacts buyers through a blind profile that reveals the details of the company without showing its name. The approved buyers are then required to sign a Buyer Confidentiality Agreement that binds them from releasing the details of the company to the third parties.
Negotiations are meant to help find a middle ground for both the buyers and the sellers. The broker discusses the terms of the sale to the buyer in a bid to reaching a compromise. Such issues that may be negotiated include, the business sale price, the financing options, the transition period, employees, and suppliers among others. Where the buyer is not interested with some of the assets such as buildings, and vehicles, the broker adjusts the prices to reflect the buyer’s request. He or she uses his experience in getting the best deal for the seller.
Closing the deal
The broker finalizes the details of the sale, and ensures the transfer of ownership to the buyer. He or she enables the business to run with little or no disruption during the selling and transition process. It is important that the buyer takes over the business in its best position.
The ‘sell your business’ process is quite complicated and time sensitive. A broker handles all the complex areas on your behalf to get the right buyer, and speed up the process of getting you to sell your business. The longer the process drags, the higher the risk of running into employee problems, predatory competition, and increased customer defections. Contact our professional business broker today!