Before you decide whether or not to use a broker, there are several important questions you should ask. If you want to sell your business, the first question to ask is, Should I sell it myself or hire a business broker? A good broker can make your life easier by screening out unsuitable buyers and handling most of the details of the transaction for you. The time to hire a broker is before you need one. You don’t want to be in the middle of a sale and realize that you don’t have the knowledge or understanding of the market you need. A broker is well worth the investment of time.
In most business markets, sales are made through a network of professional intermediaries. For example, most houses are sold through real estate agents, most cars through car dealers, and most office buildings through commercial real estate brokers. Here are three primary reasons how your business will benefit from hiring professional business brokers.
They know the local market.
Business sales are typically done in one area by business brokers. A broker will help you with your valuation so that you are competitive and they will position your business as unique in the local market. A broker will also be able to give you inside information about buying opportunities in their region. And, they will have an idea of what the “sweet spot” price is for your company. This is important because it gives you an idea of how much to ask for when you put your company up for sale.
For example, they may know of a company considering an initial public offering (IPO) which could make a good target for a strategic acquisition. They may know of a large company in the area that is looking to divest some or all of its holdings. Or they may have other “X-factor” type information about companies in their region that could profitably be acquired by an interested buyer. Brokers know the buyers too.
The potential buyers are pre-screened.
If you decide to sell your business using a broker, it is important to remember that your broker will be working on behalf of the buyer too. Therefore, your broker needs to know as much about prospective buyers as you do. One way your broker can do this is by screening out unsuitable buyers and suggesting only those that are likely to be a good fit with your company.
Another way is by building a rapport with buyers and listening to their needs. This allows the broker to better understand your company and make a more educated recommendation about the ideal buyer for your company. They have access to huge pools of money. When you work with a good broker, they will have screened many, many buyers and will have identified those that are best suited to purchase your company.
They can save you time.
Hiring a professional business broker can save you months of research and thousands of dollars in fees that would otherwise be spent trying to “do it yourself”. A good business broker will have an already developed network of qualified buyers and sellers who are eager to do a deal.
A business broker is someone who is paid to locate (usually qualified) investors for you. A good broker will spend lots of time with you so you get the kind of funding you need. The kind of funding you need may include stock, debt, or hybrid combinations thereof.
A broker can help you with the financing, but they can also help you with your exit strategy. It is true that most startups fail, but that’s no reason to run the company into the ground. There are some great stories of companies that were sold for a huge profit.
Conclusion
When selling a business, there is so much to think about and arrange, it can seem overwhelming. This is true no matter what industry you are in. The key to success is to figure out how to do a few things really well. The post-pitch life of selling a business definitely takes some time to get used to.
But we’ve got you covered. We can take the stress out of selling your business by acting as your company’s sole advisor, guiding you through each step of the process, including managing the sale of your business, negotiating the acquisition of your business, and managing the sale of your business. Our professional business brokers at Transworld Business Advisors Palm Desert are equipped with the knowledge and experience in the industry to guide you through the process of selling your business. Contact us today at (760) 209-6959 to start the process!
