Sometimes business owner consider not using a business broker to list, market, and sell their business; they feel by cutting out this “middle-man” they can save money. They feel they have figured other things out and they can figure this out.
Selling a business without a business broker is risky for many reasons and it takes years of experience to truly “figure it out” and learn all the various dangers that could happen and how to prevent them. This is one profession where paying for experience can save your hundreds of thousands of dollars.
Reason #1: Prevent Buyer Scams you the Seller
A sophisticated buyer often claims that sellers do not need a business broker or an attorney to buy your business. They claim they will purchase your business “as is” with all the business’ contents. They offer you a higher price than what you think your business is worth. The seller is excited to sell quickly and for such a high price.
From here, the buyer gives the seller a check and immediately after taking procession sells the business’ assets for profit. You realize this after the check bounces. You are left with no business and no money.
This is one scam of many that are used on unsuspecting sellers. As a business broker we hear all the stories about how sellers can get taken advantage and we know how to prevent that. Savvy buyers are coming up with new tricks every day.
Reason #2: Brokers provide a basis for paperwork
Without a business broker, an attorney may charge $200-$400 to create custom offer and closing documents.
However, a professional business broker provides court-tested templates of these documents, saving hundreds, if not thousands of dollars. Your attorney can then review and make necessary edits for much less than the cost of custom documents. Saving you time and money.
In addition, lawyer fees are paid even if the deal does not close. An experienced business broker creates the documents that you may need and then you review with your attorney, then he/she moves forward to make sure the deal gets closed. A business broker only gets paid WHEN the deal closes. They work hard to remove roadblocks to help you get your business sold.
If you do not have a deal making attorney, an experienced business broker can introduce you to several that they have worked with that are looking to protect you as well as cooperate to get the deal done.
Reason #3: Brokers can minimize deal fatigue.
Without a business broker, many deals stall out due to all the small details that have to be addressed to get the deal done. Sellers often get deal fatigue and kill the deal due to overload and stress. It just becomes “too much” for them to do as well as running the business.
Business brokers understand the essence of time and are skilled at organizing multiple people, such as the buyer, the attorney, the accountant, the landlord, to name a few and coordinating the small details of selling a business.
Furthermore, learning about the steps and coordination of the sale of a business during the actual process is time-consuming and exhausting for sellers. This often leads to frustration and the seller gets deal fatigue and fizzles out before the sale is closed.
Leveraging a business broker’s time and experience pays off greatly during the due diligence process. They can manage all the minutia of the deal and keep the deal moving forward to prevent deal fatigue and get to closing.
Reason #4: Keeping it Confidential
Business brokers understand that confidentiality is key when selling a business. If you attempt to sell your business without a broker, you will be running the business as usual while still trying to market, coordinate, screen buyers, collect documents, and move the sale forward. This will most likely lead to employees discovering the business is for sale, which may cause key employees to seek employment elsewhere.
One business lost 30% of its sales when key employees quit for fear of the business selling. This decline in sales led to loss of business value, something this business is still trying to recover from. Brokers understand confidentiality is key and isolate the seller from the day to day operations of selling a business hence keeping the details away from the employees and others.
Reason #5: Getting more than 24 hours in a day
The sale of a business can up to 600 hours for a seasoned business broker. Now add time trying to learn how to do it and all the mistakes that need to get corrected and it could be a thousand hours or more to sell a business.
For an already busy business owner, this is extra time a business owner simply does not.
By leveraging a business broker, a business owner’s time commitment is drastically reduced. The broker handles all the heavy listing like marketing the business, managing endless buyer inquiries all asking the same questions, pre-qualifying buyers, sending buyers information and much more.
A business broker understands the time involved and the steps needed to move the sale of the business forward. The business broker can handle all of these steps while the business owner puts their full attention on running the business and making sure everything looks great for a new buyer.
Reason #6: Many Buyers = Higher Price
One buyer is no buyer is a saying often used in brokering businesses. When there is only one buyer, the buyer has the upper hand and gets to dictate terms because there is no competition.
This is another area where a broker adds immense value to your deal.
Business brokers specialize in finding buyers. Because the best brokers do extensive advertising of your business, there is always an opportunity to bring another buyer.
Sellers now have the upper hand because they do not have to take a deal just because there is a buyer.
The broker can continue marketing the business until they get an offer closer to the seller’s asking price.
Our business brokers works diligently through extensive marketing, personal relationships and multiple buyer databases to present several offers to the business owner. This way, you are able to evaluate these offers and choose the most lucrative offer for your business with the best terms.
For the small fee that a broker charges, often the seller can get a significantly higher value for the business not only paying for the broker, yielding the seller more profit with less stress.