A Business Broker is a specialist in the sale of operating businesses.
The broker normally represents an owner who is selling their business, but occasionally the broker will represent a buyer. The broker cannot fairly represent both seller and buyer in the same transaction. The seller who contracts with a broker is the broker's client and the buyer is a customer. The buyer should always have independent legal and financial advise. When a buyer enters a contract with a broker, the buyer is the client and the seller must seek independent advise.
This can be achieved by presenting your business in its best light and creating competition among buyers.
Yes you can but why would you? It takes specialized skills and experience to do the job right and to keep the sale confidential. Experience shows that it can take up to 400 hours of professional time to sell a privately owned company. The experience of a professional Business Broker can be invaluable in identifying a buyer, negotiating a deal, and keeping the transaction alive through to closing. This ensures that you sell your company at the best possible price.
A professional Business Broker. Just as you would select a doctor, a lawyer or an accountant for a difficult job, look for a specialist with the necessary skills and experience, and with whom you have a good working rapport.
A skilled Business Broker will do the following:
- determine the market value of your company and advise on how to maximize this value;
- design a comprehensive marketing strategy;
- prepare a superior selling brochure;
- find and qualify prospective buyers;
- negotiate the best possible terms for you;
- hold the deal together through the closing.
Contingency fees for selling a privately owned business generally start at 10% of the asset price, then scale downwards depending on the transaction size. Most successful sellers have found that skilled Business Brokers earn their fees by maximizing sales prices while maintaining confidentially.
While a Business Broker normally represents the seller, his experience will provide many benefits to a buyer. As part of the process of getting a business ready to market, a professional Business Broker will:
- qualify sellers for motivation and reasonable expectations;
- have prepared a comprehensive business review;
- providing a systematic buying process for both buyer and seller;
- assist in the preparation of a sound letter of intent;
- provide the skill necessary to close gaps between differing viewpoints; and
- help resolve problems which will occur during the closing process.
This is a complex issue. In general, business values are determined by some combination of the value of the underlying assets values, and a capitalization of "normalized" profits. Unlike real estate, it is nearly impossible to obtain truly comparable sale prices for most small and mid-sized privately owned businesses, and "rules of thumb" are often misleading. This is where the experience of the Business Broker and their tested valuation methods come into play.