The timing is right – you have a great opportunity to buy a growing business or perhaps you’d like to sell your company and retire. There are plenty of reasons people choose to buy, sell or merge their business, particularly in these challenging times.
Our rapidly changing economy is driving many business owners to evaluate their options or accelerate their plans to buy or sell. However, buying or selling a business is a complex transaction.
Even savvy entrepreneurs need someone who can help guide them through the process. Whether you own a small, family-owned company or a large franchise, a business broker is essential to your investment or divestment.
What is a Business Broker?
A business broker helps you make a fully informed decision about the sale or purchase of a business.
Sometimes called a business transfer agent or intermediator, these experienced professionals leverage their expertise and network to ensure that the transaction goes smoothly. In some states, business brokers are required to have a license.
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Brokers are often well-connected with accountants, attorneys, and finance professionals who may be needed to facilitate the sale.
Most importantly, a broker is someone who looks out for the interests of their client and removes the roadblocks from the process. The stakes are high when you buy or sell a business.
When you work with a trusted broker, you can be confident you are connected with the right buyer for your business and you are making a prudent decision.
Why Your Business Needs a Broker
Maybe you already have an accountant, an attorney, or even a business advisor. You might wonder what makes a broker different from one of these other knowledgeable professionals.
While an attorney or a financial advisor might be able to assist you with a part of the process, their area of expertise likely does not extend to all of the components of the sale.
For example, you wouldn’t want your accountant in charge of marketing your business. A business broker brings a unique set of skills that will help you from start to finish.
An outside perspective can help you see things objectively and make a wise decision.
Here are the five reasons why your business needs a broker:
An experienced business broker understands the market and where the market is going.
They can use their insight to guide you to a probable selling price. As an owner, it can be difficult to separate your emotions from the numbers, particularly if this business is your life’s work. Your broker can help set realistic expectations by analyzing comparable sales and industry trends.
Overpricing your business can backfire.
Serious buyers won’t even look.
If you are forced to lower the price later, you might look too eager to sell.
Buyers could take advantage of this and offer you even less because they perceive that you are desperate. With a fair, realistic price from the start, you are in the driver’s seat during negotiations.
Buyers feel a sense of urgency when the business is priced competitively.
An accurate valuation will ultimately play in your favor.
Confidentiality is essential for both the buyer and the seller during the acquisition process.
Most business owners do not want their employees, customers, or suppliers to know that they are considering selling. Likewise, most buyers do not want to advertise that they are looking to make a strategic purchase.
A broker can help identify qualified buyers discreetly and facilitate confidentiality agreements.
As the pool of potential buyers narrows, a broker can help phase the release of information.
If the parties choose not to move forward with the transaction, confidentiality protects both parties and allows them to explore other opportunities in the future without creating upheaval within their business.
Most importantly, confidentiality allows business owners to share the news of a successful transfer of ownership at the appropriate time. As astute business owners know, it is important to communicate major changes thoughtfully.
A transition will be far less disruptive to employees and customers if the news is delivered by the right people, at the right time, and with the right message.
Confidentiality ensures that the buyer and seller have the opportunity to create their own communication plans.
After negotiations, you don’t want paperwork to cause delays or create a costly legal battle. Instead, a business broker will make sure that you and your business are in compliance with all of the necessary documentation and legislation.
A broker can guard against delays, avoid technical pitfalls, and protect you from legal fallout.
Even if you are highly successful at marketing your own product or service, it is helpful to have someone else develop a marketing strategy that will attract potential buyers.
An experienced business broker will maximize your exposure with a multi-pronged marketing program. Ideally, you will work with a broker who specializes in your industry or sector.
They will know the 5 types of prospective business buyers, and how to market to each type.
This allows your broker to use their network to generate leads and determine which candidates are a good match for your goals as a buyer or seller.
Local Kitchen & Bath Construction Company, Faia Construction DBA Dreammaker, is for sale in the Greater New Orleans area. This is the perfect opportunity for a small business to expand their market area. #nolabusiness #smallbusiness #colekw #listing pic.twitter.com/RNJGlmdBqq— Russell Bernstein (@bizrussell) October 19, 2020
A business broker has the bandwidth to dedicate time and resources to necessary to effectively manage the marketing program for your business.
A business broker is a trusted advisor during the negotiation process.
This person knows the negotiating price, terms, assets and other keys aspects of the sale intimately. For some owners, the terms of the sale are critically important.
For example, they may want to know that certain employees will be retained after the transfer of ownership.
A business broker is a vital resource to the seller at every stage of the transaction, but particularly during negotiations.
The outside perspective of a broker can help both buyers and sellers make rational decisions and minimize emotional bias.
A broker also acts as a buffer between the buyer and seller when tensions run high.
When you work with a well-respected business broker, you are working with a trusted partner who has your best interest in mind at all times.
As you can see, there are many benefits to working with a business broker. Whether you are a buyer or a seller, you want to optimize the value of the transaction. A business broker can help you identify qualified buyers and make a smooth transfer of ownership.
Winning Hand Corporation
Winning Hand Corporation brings more than 40 years of business brokerage experience to every transaction.
We support business owners in manufacturing, distribution and construction across a five-state region: Oklahoma, Kansas, Missouri, Texas and Arkansas.
If you are looking to buy or sell a business, we can consult you so that you make a smart decision with confidence.
Contact us to learn more or check out our free guide: Five Mistakes to Avoid When Preparing your Business For Sale by completing the form below: