So, you want to sell your business. Let’s define broker and how they can help you.
It’s not uncommon for a business owner to sell their business to someone else who wants to buy it. The process of selling a company, however, is not always as easy as it may appear. So, the owners of the business may solicit the help that is needed to make sure the sale is handled appropriately. This is why so many business owners may want to contact a business broker to assist with handling all of the related activities. From starting the process to completing the actual sale, there is a lot to be done during these times.
Many times business owners will hire business brokers since they are experienced in selling businesses as part of their regular job duties and responsibilities. Because the primary role of the business brokerage firm is to sell their client’s business, they are responsible for the following activities.
Establishing a Reasonable Market Value
After a business owner hires a broker, one of the first things that they are required to do is to obtain an appraisal of their client’s business. When the appraisal is complete and they have it in their possession, they can advise their clients on the business’ realistic market value. With this information, the broker and their clients will work together to come up with a profitable but fair selling price. Even though there are usually numerous elements that will be taken into consideration, the actual value of the business will be based on a review the business’ financial statements and their tax returns. The broker will also request a cash flow analysis, and they must be prepared by a professional accountant.
Developing a Customized Marketing Campaign
When the client and the broker has agreed on the price, their next step is to develop a customized marketing campaign that will help with facilitating the sell of the company. It is important to note that some brokers will also have some buyers available that may want to purchase the business immediately. However, if this is not the case, the role that they play is to prepare professional information that will present the benefits of buying the company.
Choosing Qualified Buyers to Consider
Before the broker introduces their clients to potential buyers of their business, one of the brokers main jobs is to ensure each potential buyer has been pre-qualified. The pre-qualification process is designed to ensure the buyers who are interested meet certain prerequisites. So, there are specific things that they will be looking for. Most of which includes surveying the buyer for sufficient amount of funds. The broker may also want to see if the buyer has an individual brokerage account that has the resources needed to make the purchase. This is essential information because potential buyers are normally required to put down approximately fifty percent of the company’s purchase price in escrow. If the remaining funds will have to be gathered via a loan, the broker will make sure that the potential has the documentation that will be needed in order to present it to the lending institution.
Facilitating their Client’s Contract Negotiations
After potential buyers have gone thru the pre-qualification process and they are approved, one of their next steps is to get the two parties to the table for negotiation. It is important to note that these brokers play a significant role in these negotiations because they have to get both parties to agree. One of the main reasons for their presence is objectivity in perspective and their ability to help with expediting the process from the initial start of their discussion to the completion of the sale. Which means, once the negotiations are complete and the buyer is ready to buy, they are also there to help to draw up the appropriate contracts so that they can be signed.
When a business owner decides to sell their business, they may solicit the help of a business broker. The broker’s primary responsibility is to see the sale all the way through from the start to finish. Their job involves securing a profitable and fair selling price, developing a customized marketing plans and facilitating the negotiations of the contracts.
Selling a business is similar to buying and selling real estate and or equities. The definition of a real estate agent is very similar to a business broker. A fair price for the home you are buying or selling must be established as well as making sure the transaction is handled smoothly between both parties. Likewise buying and selling equities requires a middle man that has a broker dealer registration to help facilitate a sale or purchase of shares. A brokerage firm by definition will have this registration. So, you see, it’s all very similar. Whether you are buying and/or selling a business, real estate, equities or anything of significant value for that matter there is likely to be a broker involved to help the process move along smoothly.
To you everlasting wealth!