As a small business owner, selling your business may be one of the biggest events of both your professional and personal life, that you will go through once, perhaps twice, in your lifetime. Having an experienced business broker on your side can help you sell your business in a timely, stress-free, and profitable manner.
While selling their business, many sellers take a Do-It-Yourself (DIY) approach mainly to save money on broker commissions. However, many researches have consistently shown that the DIY approach has many disadvantages including, among others, fewer qualified buyers, slower sale process, lower sale price, and disruption of business operation.
While you are the expert in your business and even industry, you are most likely not an expert in the sales process, but importantly, there are those who are. Having successfully sold many businesses like yours, business brokers can help you sell your business more quickly, efficiently, and profitably.
There are many benefits to using a broker to sell your business, including:
- Confidentiality: Unless you desire otherwise, a business broker will use nonspecific descriptions of the business, and will require signatures on strict confidentiality agreements from prospective buyers to protect the identity of your business and provide you a protective shield of privacy.
- Business continuity: With a business broker now engaged in actively selling the business, you can maintain a focus on running the business while your broker is working on the sale. The sale process can be long, and not hitting budget can be detrimental to a deal.
- Marketing. A savvy business broker understands the key values that buyers are looking for in a business, and can assist you in identifying the changes necessary for a better selling price. A business broker can help present your business in the best light to maximize the sale price.
- Reaching maximum buyers: Business brokers have the tools and resources to reach the largest number of potential buyers, some of which may include using a proprietary database of qualified buyers, collaboration with other brokers, sourcing active financial investors and strategic buyers in your industry, and utilizing savvy online and offline marketing techniques. Business brokers can get the word out about the business far more effectively than any owner could manage to on an individual basis.
- Valuing your business. Business brokers can use transaction databases to provide you with guidelines or reference points to determine the sale price range for your business. This is called Market Value Approach. Some business brokers are even trained to prepare business valuation models based on Income Approach and Asset-based Approach. Regardless of the approach used, knowing an approximate value of your business can help you negotiate with confidence.
- Leveling the playing field: If you are dealing with a buyer with a lot of previous experience in acquiring businesses and now having a team of professionals helping him in this deal with you, having a seasoned business broker on your side can balance the knowledge and experience.
- Closing the deal: Your business broker is compensated based on the percentage of the sale price and is paid only if the sale occurs. This motivation alone is enough to ensure that he is doing everything he can to close the deal for the highest price and in the least amount of time possible.
A DIY approach may work well perhaps for tackling a “honey-do” list, but when it comes to selling a business, let the experienced brokers handle the entire sale process to your advantage.