Great Benefits of Using Business Brokers to Sell Businesses
Whether you’re preparing to sell your first business or your upcoming sale is just the latest of many, selling a company is a time-intensive process that can quickly become overwhelming. However, when you work with a business broker, your broker can save you stress, effort, time, money, and more. Here’s a closer look at some of the key benefits of working with business brokers when making a sale.
1. They Might Already Have a Buyer in Mind
Depending on your industry and your business itself, finding buyers can be a challenge. One of the main draws of business brokers is that they maintain networks of active, interested buyers. This means that once your business goes on the market, your broker can quickly connect you to multiple potentially interested buyers.
2. They Keep Things Confidential
If your employees, clients, or customers learn that you’re selling your business, you might experience significant disruption. Your best employees might worry about losing their jobs and start applying elsewhere, and your customers might turn to competitors instead.
It can take significant time to sell a business, and if your company starts experiencing major issues before you find a buyer, a successful sale can become next to impossible.
However, when you have a business broker, you can avoid letting customers and competitors know you’ll be selling. Brokers can conceal identifying details of your business. Once your broker has verified that a potential buyer is qualified, they can ask the buyer to sign a non-disclosure agreement.
3. They Can Accurately Value Your Business
There’s a lot to consider when you’re preparing to sell a business — so much so that it’s easy to overlook the basics. A successful sale starts with an accurate valuation. Overvaluing your company means you’ll find few, if any, buyers. Undervaluing means you’ll potentially cheat yourself out of tens of thousands of dollars.
Business brokers value businesses on an almost daily basis. And because they’re uniquely attuned to market dynamics, they can help you price your business for a quick sale or advise you to sell later if you want to maximize profit.
4. They Can Handle the Logistics
Selling a business is far more complex than selling a vehicle — or even selling a home. From start to finish, the process is filled with logistical challenges:
Creating a marketing strategy
Communicating with interested buyers
Vetting buyers
Negotiating a deal structure that’s beneficial to both of you
Ensuring all necessary documents are appropriately filed
Addressing the tax implications of a sale
Even if you’ve sold companies before, tackling these challenges while continuing to run your company isn’t an easy feat. Business brokers can give you the peace of mind that comes with knowing that the sale — with all of its intricacies — is in good hands.
Is Working With a Business Broker the Right Choice for You?
Ultimately, whether you decide to work with business brokers or sell your business on your own is up to you. However, if you do choose to work with a broker, you’ll likely find that the sales process becomes smooth and efficient. And most importantly, you’ll have more time to focus on running your business.
What Kind of Businesses Do Business Brokers Work With?
The International Business Brokers Association notes that business intermediaries — business brokers, merger and acquisition advisors (M&A advisors), and investment bankers — tend to segment themselves by dollar amounts of value or revenue.
While many business brokers work with what are commonly referred to as “Main Street businesses” — those valued at less than $2 million — some, like Sunbelt Business Brokers, work with lower-to-middle market companies valued at more than $20 million.
Be that as it may, as you wonder whether business brokers would work to buy or sell your business, it’s better to focus more on the complexity of your business and the transaction as opposed to strictly considering the value of your business.
Selling or buying a business is a complex transaction no matter its size; what’s most important is having a professional business intermediary or team that can handle your deal from beginning to end, allowing you to stay focused on running your company. With that being said, read on to find out what kinds of businesses work with business brokers in order to be bought or sold.
Businesses Handled by Business Brokers
The experience, skills, and services of business brokers most often determine the businesses they work with.
Nevertheless, handling everything from valuations to negotiations and maintaining confidentiality to ensuring compliance with regulations means they often work with a wide swath of businesses, including (but certainly not limited to) the following:
Auto body shops
Hair salons
Restaurants
Pet stores
Construction companies
Tech companies
Printing shops
Cleaning businesses
Lawn care
Property management firms
For you, the key is finding the business brokers that fit for buying or selling your company; if you’re selling, consider starting your journey with the business valuation calculator provided by Sunbelt Business Brokers.
Small and Medium Businesses Bought and Sold
Among business intermediaries, business brokers handle transactions for small and medium businesses from initial consultation to closing, and they often help with valuation, marketing, vetting buyers, and negotiating and structuring deals, among many other tasks.
With that said, it’s clear that business brokers come from a range of backgrounds and wear a lot of different hats in bringing buyers and sellers together, so as you work to choose business brokers to handle a purchase or sale, ask the following questions:
How long have you been a business broker?
What is your success rate?
What accreditations do you have?
Are you a real estate agent?
What size businesses do you buy and sell?
That answer to that last question, in particular, will let you know the kind of companies your prospective business brokers normally work with, allowing you to ascertain whether they’d be a good fit for you right out of the gate.
Find the Right Business Intermediary for Your Business
When it comes to business intermediaries, there are no clear boundaries establishing the types of companies business brokers work with; some business brokers, like Sunbelt Business Brokers, have dedicated advisors who have bought and sold Main Street and lower-middle market businesses. Your business might be one of the businesses on the list above, or it might have revenue below $25 million. Either way, there are business brokers who will work with you, but you have to put in the work to find the ones who will work best for you.
Business Brokers Sell Your Business While You Focus on Operations
In most cases, a business broker is indispensable when you’re selling a company. That said, if you’ve never sold a business before, you might wonder what exactly it is that business brokers handle for you.
The truth is that selling a business is more complex than it looks, and by handling each step of the process, a business broker leaves you the time you need to focus on running your business. Here’s a look at what business brokers do for you behind the scenes.
They Give You a Precise Business Valuation
Business brokers are experts at what they do. They’re intimately familiar with businesses like yours and what they’re currently selling for, so they can create a business valuation that gets you maximum profit while remaining realistic.
They Find the Right Buyers
If you’ve never sold a business before, you might think it’s as simple as placing a listing and waiting for potential buyers to call. In reality, most business deals happen through networking. That’s something you could feasibly do yourself, but this kind of networking can be incredibly time-consuming — especially if you don’t already have promising business contacts.
Business brokers have pre-existing networks of buyers, and they also have the time to seek out new buyers if need be. That’s what they’re paid for! If you let a broker find your buyer, you’ll have more time to focus on the daily grind of running your business.
They Negotiate Deals
Once you find a buyer, you might think that the sales process is almost done. However, this is where it starts to get more complicated. Business brokers handle the back-and-forth between your business and the potential buyer.
Before closing, they generally negotiate a deal that ends up being mutually beneficial. Just like finding buyers, this is a time-intensive process that’s difficult to do when you’re also handling daily operations at your company.
They Keep Things Confidential
It might not seem like keeping a sale confidential has anything to do with running your business. However, if it becomes public knowledge that your company is for sale, that can adversely affect your business. Trying to handle problems that come from that public knowledge while managing the business and trying to sell it would be overwhelming for anyone!
Leave the Sales to the Experts
If you want to maximize your chances of getting a great sale price, you need to make sure your business continues to perform well while it’s on the market (and while you’re in the process of closing a deal). And if you’re the one in charge of running your business, it’s virtually impossible to handle every aspect of the sale yourself while also overseeing the business. Fortunately, there’s an easy solution. When you work with a business broker, you can outsource the marketing, interfacing with potential buyers, and negotiating to someone with experience. When you work together, you have a good chance of getting a fair price — or even better — for your business.
Business Brokers Can Expedite the Sale of your Commercial Business
You may be great at selling your goods or services, but selling your company requires a breadth and depth of skills only found with business brokers. If you’re looking to sell your commercial business and it needs to be done relatively quickly, a business broker is the professional to call.
Many commercial businesses take between four and twelve months to sell. The process — from deciding to sell to signing closing documents — involves dozens of factors and decisions. As a commercial business owner, you are focused on your customers and won’t have time to attend to the details of closing a commercial business sale quickly.
Here’s what business brokers can do for a commercial business owner:
Determine the value of the business
Prepare nondisclosure agreements
Market the sale
Screen potential buyers and schedule meetings
Assist with proposals, negotiations, and the structure of transactions
Professional brokers from Sunbelt Business Brokers are ready to take on these tasks, expediting the sale of your small or medium-sized business.
Getting Guidance From Experience
No one knows your commercial business better than you. But to sell your business — and fast — you need to know how the companies around you are faring, what your competitors are doing, and what kind of market there is for your goods and services.
Professional business brokers maintain a wide-ranging network of buyers, sellers, and other professionals. They can help you gather the information you need while they quickly get up to speed on your business, drawing on their skills and background in selling similar companies.
Business brokers are often called intermediaries because they are at the center of the sale. To succeed in this complex role, they must possess a wide range range of skills:
Business valuation
Business management
Corporate finance
Economics
Financial accounting
Industry knowledge
Law and licensing
Negotiation
Sales and marketing
This deep and wide experience helps set clear expectations from the outset, keeps the deal from running afoul of the law, and ensures there are no problems even after the closing. The value a good business broker brings to your deal will far outstrip what you pay.
Getting Maximum Value
Even though you want to sell your commercial business fast, there’s a long list of to-dos before that can happen. You must understand your assets and liabilities, have a firm grip on your financial statements, supply details on equipment, and compile files on customers, orders, contracts, insurance, and licenses.
With a business broker on board, you will not only cut down the time needed to gather and understand that information but will also have someone who can help you use it to establish the maximum value for your company.
Finding a Buyer
One of the greatest values business brokers will add to your deal is the list of potential buyers they maintain. Business brokers can help you value your company to seek the maximum price in the market, and they also can evaluate potential buyers, market your business, and negotiate for you — tasks that could take you months to complete on your own.
Through their experience and knowledge, business brokers offer the fastest path to selling your commercial business.
How Beneficial Are Business Brokers for Selling My Sole Proprietor Business
Building a business from the ground up as a sole proprietor can be incredibly challenging. But if you’ve done the work, you might decide that it’s time to sell and move on to your next business venture.
You likely already know that business brokers are essential when it comes to selling larger businesses. But what about sole proprietorships? Here’s a look at how business brokers can make a major difference in the sale process.
They Know How to Find Buyers
Business brokers maintain a network of buyers who are eager to purchase businesses. When it comes time to sell yours, your broker will connect you with enthusiastic potential buyers.
What if you already have a buyer in mind? You’ll still benefit from working with a broker because they help with more than just finding buyers.
They’re Expert Negotiators
Since you’ve worked so hard to build up your sole proprietorship, handling the negotiations yourself isn’t a great idea.
Negotiating a sale price for a business isn’t like haggling at a flea market. Business brokers sell businesses day in and day out, so they’re well-versed in the difficult art of negotiation. They’re also familiar with changing trends in your industry, so they will be able to tell you whether an offer is worth taking.
They Can Help You Minimize Tax Liability
Most business owners sell with the goal of getting as much profit from the sale as possible. However, the more profit a sale generates, the more you’ll owe in capital gains tax.
The way a sale is structured can make a dramatic difference in the amount of tax you owe, and business brokers can help you design a deal structure that keeps your tax liability as low as possible.
Tax code is difficult for most people to understand, and the fact that it’s constantly changing doesn’t make it any easier. Brokers keep track of changes in tax code and can use that knowledge to execute successful sales.
They Save You Time
If you’re going through the process of selling your business while you’re also running it, you may have already found that it’s a challenge to manage both. This is particularly true during the due diligence process, where the buyer can request many types of documentation:
Bank statements from the past 3 to 5 years
Tax returns from the past 3 to 5 years
Financial statements from the past 3 to 5 years
Any relevant leases or contracts
Insurance policies
Employee handbooks and official protocols
Business brokers can help you find and compile this information ahead of the due diligence process. You can trust them to handle the logistics of the sale so you can dedicate your time to your business.
Are Business Brokers Right for You?
Selling your sole proprietor business is a major event, and it’s something you need to plan with caution. When you work with a business broker, you have a professional on your side to take charge of finding a suitable buyer, getting a fair sale price, minimizing your tax liability, and ultimately, saving you time.
Top 4 Ways a Business Broker Benefits the Sale of a Business
You may have had friends or business contacts recommend that you use a business broker when selling your business. But few people know just what a broker can do unless they have direct experience with the profession. Here’s a look at some of the main ways a business broker can make things easier for you during the sales process.
1. You’ll Get a Quicker Sale
Most brokers maintain a list of active buyers looking to purchase a business as soon as possible. They also typically have contacts at banks, so if a buyer is ready to commit, the broker can likely help them secure financing.
As a result, when you work with a business broker, you’ll likely be able to make a sale much faster than if you were to go it alone.
2. You’ll Have a Guide Through the Process
From negotiating a deal structure to choosing the right attorney to assist with closing, completing a sale has many more steps than you might think.
You may be new to the ins and outs of selling a business, but it’s something business brokers deal with every day. A good broker will help you through the process and make sure you don’t miss any crucial steps.
3. You’ll (Probably) Get a Better Price
Because business brokers are often in contact with numerous would-be buyers, they can help you find and choose a buyer quickly. Having such an extensive selection of contacts also means they can usually get a better price for your business.
How? Business brokers almost always have multiple buyers interested in a single business, and they use that fact as leverage when communicating with potential buyers. While it’s not an auction per se, the buyers will often try to outbid one another for your business.
By contrast, it can be challenging to find just one interested, qualified buyer when selling your business on your own, let alone several.
4. You’ll Save Time
Many people who sell a business for the first time are surprised at how long it takes. Between marketing, meeting with potential buyers, negotiating deals, and moving through the closing process, selling your business leaves little time for anything else.
If you’re deeply involved in running your business, you may find it impossible to keep up with your typical duties while attempting to orchestrate a sale. Even if you aren’t involved in day-to-day operations, handling a sale yourself can be a massive investment of time and energy.
You still need to be somewhat involved in the process when you work with a broker. However, they can handle the responsibilities of marketing and interacting with buyers for you, leaving you free to run your business or pursue other interests.
The Right Broker Makes All the Difference
Selling a business is a complicated process, but skilled business brokers can help you navigate it. Of course, selling on your own is always an option. More often than not, however, working with a broker pays off — both financially and otherwise.