5 Benefits of Hiring a Business Broker
Many small business owners struggle with whether to hire a business broker. While business brokers aren’t able to replace all of the services of an attorney, accountant, or financial advisor, they can be a valuable member of a deal team. For many owners, hiring a business broker may be a great option.
In addition to helping sellers prepare, business brokers fill a valuable role as intermediaries. They can help find potential buyers and negotiate mutually beneficial agreements. Also, brokers have experience coordinating previous deals, which can lead to a more efficient process. And finally, they may be able to contribute valuable insight into what buyers want to see in a business. This knowledge can help brokers better prepare the business and its owner for the sale process.
To help determine if hiring a business broker is right for you, here are five key benefits to consider:
For many business owners, selling a business is an unfamiliar process. While there are cost effective resources available to help, sometimes the best investment is in your own time. For a lot of owners, selling their business is a one-time endeavor that comes with a lot to learn. Hiring a business broker to your deal team can help jump start your sale process and keep your deal moving.
Importantly, having an experienced business broker on your team can let you stay focused on running your business while they manage your sale. For many business owners, particularly those that operate the business on a day-to-day basis, this is a critical consideration. A business broker quarterbacking the day-to-day activities, puts valuable time back in an owner’s pocket.
Lastly, a business broker’s experience is especially apparent when it comes to working with first-time business buyers. Business brokers can save valuable time by helping buyers stay on track, which in turn can keep deals moving.
Another key advantage of adding a business broker to your deal team is their financial expertise. Familiarity with key financial metrics that buyers are likely to be interested in can make sure you highlight the most critical features of your business.
A business broker can also help clean up and standardize financial records. These housekeeping items can include removing the owner’s salary and other one-time items to better reflect the business’s potential for a new owner. For many small businesses, these adjustments can make a big difference in the final sale price.
Just as importantly, good business brokers will know how businesses are being valued in the current market. As with real estate, business valuations tend to fluctuate over time based on the health of the economy, availability of financing, and other factors. Business brokers can make sure your asking price is in line with where businesses are being sold.
Marketing small businesses is more of an art than a science where experience can be a big factor in success. Hiring a business broker onto your team can make sure you are marketing your business using industry best practices. And business brokers can tap into their knowledge of what buyers are looking for to help position your business in the best possible light.
Also, business brokers will often have established marketing networks to quickly get your business in front of potential buyers. Good business brokers will also be adept at crafting catchy advertisements and business listings to attract interest while maintaining any desired confidentiality.
A lot of time can be wasted in a sale process interacting with unqualified buyers who are simply “window shopping.” Experienced business brokers will have an eye trained on spotting unqualified buyers.
Weeding out potential buyers early in the process can save valuable time. This lets sellers focus their precious time on only the most serious and well-prepared buyers.
Business brokers usually have established networks of accountants, escrow services, closing attorneys, and other business relationships to help facilitate transactions. For sellers without an existing set of advisors, this can be invaluable. These networks play an important role in making sure deals make it to the closing table. Getting a deal done as quickly as possible helps mitigate any risks from employees, suppliers, or customers learning about the pending sale.
Business brokers also maintain relationships with potential buyers that can help you get a deal done quicker. But most importantly, these networks offer insight into the current market demand, helping sellers best position their business for a successful sale.
When it is time to sell your business, speak to several business brokers in your area. Be sure to ask what experience they have selling businesses like yours and their fee structure. It is important that you understand what you are getting for your money. Hiring the wrong broker could mean you don’t sell your business, or don’t make as much on the deal as you could. Hiring a good broker, on the other hand, can often be the difference in getting a quick, successful sale.
DISCLAIMER: The information contained in this article is for informational and discussion purposes only, and should not be relied upon without seeking your own professional advice. The Firm Exchange, LLC is not a law firm, accounting firm or professional services firm, and accordingly it disclaims any liability for any reliance on the contents of this article. As each situation is unique, you are encouraged to discuss your specific situation with a qualified attorney, accountant and/or other relevant professional services provider.