If you’ve been looking for help selling your business, you’ve probably asked, ‘What is a business broker?’ More importantly, you’re probably curious how they can help you. In short, a business broker is a company that facilitates the sale of your business. They perform research to help you form realistic expectations as to the market value of your company.
It’s no secret that selling your business is an extremely complicated process. You’re expected to establish a market value, gather all your paperwork, locate qualified buyers, negotiate a sale price, and smoothly transfer it to its new owner. And, during all of this, you’re also expected to continue running your business and, in many cases, keep the potential sale under wraps.
In previous posts, we’ve talked about the reasons you should use a business broker to sell your business. But, ultimately, how do these reasons contribute to a higher sale price or an easier sale?
Typically, after they sell a business, a broker is paid a success fee. This fee is calculated based on the final selling price and is agreed upon before listing the business. The success fee can be a percentage or flat fee and based on size and scope of the project. For this reason, it’s incredibly important to find a broker that works full time in the selling of businesses, as their rate of success is much higher, often two to three times that of the national average and usually at higher market values.
In some cases, a business broker may charge a small upfront fee. This helps offset some costs for work that needs to be done prior to the sale, such as business appraisals, opinions of value for real estate, market research, creation of marketing materials , and more. Normally this fee is deducted from the final success fee paid at closing.
Real estate agents focus on selling a property and business brokers focus on selling a business. While a lot of real estate agents may dabble in business brokerage, they often don’t have the same capabilities, resources, or connections offered by a true business broker.
For example, a real estate agent may not have as broad of marketing channels to be able to source buyers in a confidential manner. The word getting out can negatively impact business and/or employees which in turn could reduce the price or success of selling your business.
Also, someone that does not focus full time on business brokering may not be well versed in or have access to data to properly advise clients with regard to understanding and analyzing income statements, balance sheets, cash flow, and future capital expenditures. A firm understanding of these is necessary to help a business owner set realistic expectations and be prepared for success.
Because of these reasons, it’s essential to work with someone that has expertise and the ability to confidentially attract and fully vet potential buyers. Beyond that, using a business broker means that you’re able to focus on running your business, as they can better handle the sourcing of qualified potential buyers so you don’t have to.
At Advanced Business Brokers, we take pride in our ability to educate our clients, walk them through our process, and secure the sale of their businesses. If you’re still hesitant about using a broker in the sale of your business, we encourage you to reach out to us, discuss your concerns, and let us show you how we can help.
With decades of experience and a roster of satisfied clients, you can be confident that we’ll help you work toward a successful sale. Our team of experienced brokers has worked with sellers in a wide range of industries, from injection molding, fabrication and other manufacturing, to managed IT, HVAC, specialty trades, and auto repair. So, no matter what kind of business you run or where you’re at with your exit strategy, we’re here to help.
If you’re thinking about selling your business and don’t know where to start, consider speaking with our team here at Advanced Business Brokers. We specialize in brokering and advising exit plan strategies for various sizes/sectors of businesses.
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