Why You NEED a Business Broker for the Sale of Your Business

To accurately evaluate your business worthA business broker is someone that matches those interested in purchasing a business with those who are currently selling their business. There are usually a lot of details and documents involved in the sale of a simple business transaction. If the sale is more complex, such as is usually the case with business mergers, the process becomes even more complicated. If you are considering selling a business, you might want to consider using a business broker for the following reasons.

Real estate is often valued by comparable sales. Although the sale of businesses is similar, there are not always close comparables available. For this reason, other factors need to be accounted for to come up with an accurate evaluation. A business valuation is an attempt to estimate the company?s present value and the likelihood of future cash flows. There are three primary business valuation methods, asset based approach, earning value approach, and market value approach. A business broker is a valuable resource in deciding on the best evaluation method.

To find interested and serious buyers

Even with having the most profitable and properly priced business, you still need interested buyers. It can be difficult to market to these buyers if you do not know how to reach them. Finding the right buyer is extremely important in closing a business sale. Business brokers have connections with both buyers and sellers. They specialize in different business areas and know who to market for sale businesses to. At one time, there are 15 prospective buyers on the market for every one business listed for sale. There are buyers out there, you just have to know where to find them.

To decide if a sale is the best choice

There are many reasons for deciding to sell a business. However, not every reason is the best reason to sell. For example, if your sales are declining rapidly and you simply want to get rid of the business, you are not likely to get a good offer. However, if you are selling to retire for example, and have good sales, you are likely to have a successful sale. Just make sure discuss your plans of a sale with your business broker and attorney as soon as possible, to prevent a rush sale.

A 2014 survey of business owners revealed that while 32% of business owners had discussed exiting their business with their spouse or other family members, only 13% had spoken with an attorney about their plans. While it is important to discuss these plans with other operating partners, you also want to give your business broker sufficient time to evaluate the business and to market to interested and serious buyers.

To handle the business sale negotiations

Similar to the real estate industry, a single sale often requires multiple negotiations. However, with a business sale, there are likely to be even more negotiations. Your business broker will be a valuable resource during this process. They will use their advanced negotiation skills and work on getting the best price and closet offer to your asking price. In most cases, the fees of the business broker are well worth it, as they are able to negotiate a higher offer.

In some ways, the business sale market is similar to the real estate market. However, in other ways, it is much different. It can be harder to find interested buyers and to come up with an accurate market price. Working with a business broker can provide a single business many advantages to the sale process, including more interested buyers and a higher offer and sale price.

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