Do You Really Need to Hire a Business Broker?
If you’re contemplating selling your business, you may also be taking a closer look at your finances. And that can spur a desire to save money at all costs. Many first-time business sellers are reluctant to hire brokers.
If you’re contemplating selling your business, you may also be taking a closer look at your finances. And that can spur a desire to save money at all costs. Many first-time business sellers are reluctant to hire brokers. After all, you don’t have to have a broker to sell your business, and you already know how to succeed at sales. So shouldn’t you just do it yourself?A DIY approach to selling your business almost always nets a lower sale price and less favorable terms. Here are five things to consider when weighing whether to sell on your own or hire a business broker.
A good business broker knows the market in your area and your niche. This immediately opens access to potential buyers, and also gives them unique insight into the right time to sell, standard sale terms, and similar factors that can affect the deal. Do you know what comparables are going for, have many industry connections to qualified buyers, and know which market trends are most likely to influence a sale? If you can’t answer with are sounding yes, you need a broker.
Access to Resources
A good broker comes with an entire team—marketing experts,researchers, accountants, and other dedicated M&A gurus. These resources can expedite the sale and get you quick answers to your questions. Do you have a quality team at your disposal, with decades of M&A experience? Or would you have to outsource the work? If it’s the latter, it’s time for a broker.
You may be an expert at running your business, but how much experience do you have selling companies? Do you know how various terms can affect tax liability? How you can maximize the total amount you get at closing?What the typical buyer will expect from you? How to effectively negotiate a sale? When and whether an earn out is appropriate? For most owners, the answer is a firm no, indicating they need a broker.
A business broker lends credibility to the transaction in several ways. First, they signal to buyers that you will have a keen understanding of M&A norms, since your broker will be educating you about these norms. You’re also more likely to value your company according to are liable methodology, which makes it more likely that you’ll get your asking price. And perhaps most importantly, a broker levels the playing field,reducing the risk that a comparatively more experienced buyer will leverage your naiveness about the process against you.
Selling a business is not like selling a collector’s item oneBay, or even like selling a piece of commercial real estate. It is an exhausting, time-consuming process that requires immense legal wrangling, a demanding due diligence process, and several months (or a year or more) of planning.Few owners have time for this kind of effort. So if you go it alone, it’s almost inevitable that daily operations will take a nosedive because you'll be distracted. A broker shows a buyer that you’re still doing what you do best—running your company—and reduces the risk of declines in value at a time when strong revenue trends matter most.