At some point in the life of your business, there will come a time when you’ll have to sell it. There are a lot of reasons why businesses are sold, such as an increase in business value, the perceived risks or threats, a desire for change, or retirement.
Regardless of the reason for selling your business, this is a life-changing decision and a crucial milestone. You’ve probably worked hard to build a business, and handing it over to a new owner entails a tough (even emotional) decision.
Process of Selling a Business
Once you’ve decided to sell to your business, you’d realize that it isn’t as simple as hanging a “For Sale” sign at the main door and waiting for a buyer to take over in exchange for a stash of cash. There are a lot of things to be done and considered before, during, and after the sale.
An important question to ask is whether to hire a business broker or not? Considering the accessibility of business listing sites and online databases, is it worth using a business broker? Both sides of the argument have valid points and the decision depends upon your specific situation.
Getting the business ready for sale entails a lot of preparation. You’ll need to do proper business valuation, prepare financial documentation, address operational issues, and run effective promotions and marketing. Once it’s on the market, you’d need a lot of time and work to get a good deal. Lack of preparation remains the most common cause why many business sales fail. An experienced Orlando Business Broker recommends starting the preparation process at least two years before listing.
A successful business sale requires a sustained effort. On average, a business for sale takes around nine months to transfer to new hands. Throughout the process, you need to keep the business running and sustain its operations. Failure to manage your business properly during this stage can prove detrimental. Worse, you might end up focusing on a sale that never materializes.
Why Hire a Business Broker?
With so many things to consider, it is best for you to focus on running your business (where you’re exceptional at) – not selling it. Leveraging business brokers can facilitate the sale of your business, ensuring that everything is fully covered. While you might have to shell out around 10% on brokerage fee, you’re assured of getting a good deal. A reliable broker might be able to add around 10-12% to the sales price.
Although there are some circumstances where DIY sale by the owner seems sensible, most business owners are better off working with an intermediary, particularly with handling critical tasks such as preparation, searching for potential buyers, promotion, and negotiation. Likewise, you should also consider bringing in your team other professionals, such as financial consultants, lawyers, and accountants, for expert advice.
Advantages of Using a Business Broker
Using a broker comes with many advantages that include:
- Enables owners to concentrate on managing their business
- Access to a pool of potential buyers
- Proven negotiation skills help owners get better deals quickly
- Work as intermediaries to settle differences between the parties
- Present your business professionally and expertly thereby increasing sell value
- Attractive CIM (Confidential Information Memorandum) and teasers
- Assistance with preparing paperwork
- Screening potential buyers and choosing only the most competitive bidders
- Connections and good relationships within the local business community
- Thorough market research that helps you close good deal faster
- Access to premium business databases and listings
- Saves you time and effort
Business brokers specialize in selling businesses. They know the entire process, the documents needed, the negotiations; and know how to land good deals. These professionals take care of all the responsibilities the sale entails. It greatly unburdens you from all the stress and ensures a favorable deal.
However, using a broker also comes with some downsides such as high fees, insufficient expertise, conflict of interests, and inaccurate information. Apparently, most of these drawbacks are related to choosing the right broker. As with any other field, there are always some bad apples in the brokerage industry. Mediocre brokers would simply take a listing, upload an ad, and wait for potential buyers. So, the question is not really about whether hiring a broker is a worthwhile investment, but rather, how to hire the right professional. Choosing the right broker can make the difference between a successful sale and a failure.