March 10th, 2020 | Updated on June 17th, 2020
Have you decided to sell your business? Choosing the right business broker services can maximize the selling price of your business while landing on the wrong one can leave it dormant for many months or even years on the marketplace.
Understanding the basic concept is very important to be able to work with the right broker. Let’s first define what a business broker is.
What Is A Business Broker?
A Business Broker is a mediator between the seller and the buyer of a business. If you’re considering selling your business, they are the ones that can pair you with the right buyer.
On the other hand, if you are interested in acquiring an existing business but don’t have any idea about it, a business broker can guide you in this aspect.
They can assist you in finding the best company that matches your interest, evaluate the operation until it is turned over to you.
They can be licensed as a broker depending on your state. Their role is much more like that of a real estate agent.
The Roles Of A Business Broker
Business brokers play a very important role in the selling and buying of existing businesses. You must work with brokers who have long experience and expertise in this field because they have a vast knowledge of the business’ industries, size, and location.
With their expertise, they can guide you in selling and buying any type of business from small to medium-sized enterprises. They have a wide connection with different professionals who can help in the sale.
Brokers can assist sellers in knowing the market value of their business, and facilitate all the work to market it. If you are a buyer, they can match you with the right seller and business.
Brokers earn through commission. Sellers pay a commission of 10 percent of the sale price of the business. It can vary depending on the type of business or the individual brokerage.
The commission is clearly indicated on the Listing Agreement For The Exclusive Right To Sell signed by the seller. It is paid at the closing sale of the business.
Some broker services may charge upfront fees for the work they have to do in selling the business. Preparing a marketing package takes time and money so they need at least a portion to make things work. The fee is deducted from the commission they’ll receive at the closing.
There are also brokers who don’t charge anything until they sell a business. Dealing with this kind of broker can give you peace of mind that your business will sell.
Do You Need A Business Broker?
If you are selling your company, do you need a business broker? There are many reasons why you should get a broker:
1. You Can Sell Your Business With Confidentiality.
The majority of business owners want to maintain high confidentiality when selling their business.
They do not want to divulge this information even to their staff, suppliers, or customers. A broker can help you go through the process of selling without people knowing it.
2. You’ll Have A Strong Marketing Strategy To Sell Your Business.
Business brokers can set up the right marketing strategy and program to sell your business through email, print ads, and more. You don’t need to worry about how you are going to promote it.
3. You’re Protected From Illegal Deals
They have the proper knowledge and training in the regulations and documentation. You don’t have to worry about getting involved in questionable agreements, delays, and other issues because they are the ones responsible for avoiding such problems.
4. Easy Negotiation.
The broker is a master in negotiation. They advise the seller in all stages of the selling process. You don’t have to worry because they are experts in negotiating the price and terms until it is closed.
5. Reaching To Potential Buyers.
Business brokers have the knowledge and tools to reach the right potential buyers.
Selling a business isn’t easy. You need to know its value on the market because underpricing it can devalue your business while overpricing can mean that no one gets interested to buy it.
A business broker can play a huge role in selling your business at the right price and time. Make sure that you’re dealing with a legit broker for business.