People who have started successful businesses from scratch are no strangers to hard work. That said, you should know that the process of selling a business can be very complicated. It requires not just time and effort but also specialized knowledge, which is why it’s so important to hire a business broker to help. This article focuses on the importance of brokers when selling your business.
What Is a Business Broker?
If you purchased the business after it was already established, chances are very good that a business broker facilitated the purchase. Business brokers help sellers with a variety of tasks, as well, including everything from arranging business valuations to marketing the sale, and more. It’s the job of your trustworthy business broker to ensure that everything goes smoothly.
Business Brokers Can Help Sellers Prepare
It’s common for first-time business owners to assume that selling a business is like selling any other asset and that all it takes is finding a qualified buyer. In reality, experts recommend starting the process of getting a business ready for sale at least a year in advance.
If you want to get what the company is worth, that will require taking the time to improve its financial records, build its customer base, and make other improvements that will make it more marketable. Business brokers can assist with this process by reviewing the company’s operations and identifying areas that could use improvement.
Working With a Broker Reduces Distractions
The worst thing you can do after deciding to sell is to stop paying attention to the company’s day-to-day operations and fixate on finding a buyer. For one thing, it takes experience to value a business, create a marketing campaign, vet interested parties, negotiate with buyers, and close a deal. For another, taking the time to learn these crucial skills is a distraction from what’s important: keeping your business profitable.
Qualified buyers will want to see that your company is not just already successful but has plenty of room to grow. Getting distracted at the last minute and losing customers or clients can drive buyers away, making it less likely that you’ll get what the business is worth. Hiring a business broker doesn’t just buy years of specialized expertise. It also allows business owners to focus on maintaining profitability until the sale goes through. This is one of the ways that highlights the importance of brokers when selling your business.
Brokers Help Sellers Get What Their Companies Are Worth
After preparing a company for sale, the seller will need to get a realistic idea of what it’s worth. The fact that you’re proud of how much the business has grown and what it has accomplished doesn’t count for much with unrelated buyers. They’ll want an objective measure of worth, which means you’ll need to provide a certified business valuation.
Arranging for a business valuation is a more complicated process than you might expect. There are many methods for determining a company’s value, and getting a realistic idea of what to expect from the sale will require choosing the right one. In some cases, business brokers may even suggest using multiple methods of business valuation. Either way, the results can both offer insight into how much the seller should expect to get and act as an essential tool during negotiations.
You’ll Need Help Finding Qualified Buyers
As with any asset for sale, a business must be marketed appropriately to the right target audience. Brokers know how to create effective marketing campaigns and where to advertise the sale to attract the right buyers. Having years of experience as a business broker generates not just knowledge, but also valuable industry connections, which makes it easier to reach qualified buyers.
It’s relevant to note here that not all interested parties can be considered “qualified buyers.” That designation is only applied after a business broker takes steps to ensure that the buyer is actually ready to purchase the business. A qualified buyer has the confirmed financial ability and serious desire to make a fair offer on a business. Working with a business broker means you’ll only be dealing with qualified buyers.
Business Brokers Are Skilled Negotiators
One of a business broker’s many important jobs is to make sure that you get a fair price for the company you’ve worked so hard to build. Accomplishing that goal requires more than just providing a seller with an accurate business valuation. It usually requires negotiations, as well.
Business brokers are skilled negotiators. They know just how to facilitate the process so that both parties will walk away feeling good about the results. If you want to close the deal quickly without losing out on potential profits, hiring a business broker is the best step you can take.
Keep Track of All the Details
While most business owners are no strangers to paperwork, that doesn’t mean you have time to sort through every document to catch all the most important details. Business brokers are always detail-oriented. Your broker will do more than ensure that the Bill of Sale is legally binding. He or she can also help with gathering the many documents that buyers expect to receive during the due diligence phase, which can include:
- Two to three years of profit and loss statements
- Two to three years of tax returns
- Balance sheets
- Cash flow statements
- Copies of current leases
- Insurance information
- Confidentiality agreements
- Executive summaries
- Detailed profiles
- Professional certificates
- Employment agreements
- Distributor and supplier contracts
- And more
Business brokers can also collect essential information from buyers, such as personal financial statements, letters of intent (LOI’s), and purchase agreements. These professionals will also keep everything organized and ensure that you don’t miss a single detail or deadline, helping to ensure that the sale moves forward without any unnecessary delays.
You Need a Trusted Advisor
While it’s not unheard of for business owners to handle the sale of a company alone, it’s always better to have a trusted advisor on your side. The small amount of money you invest into hiring a business broker will pay off in the form of bigger profits when the sale goes through. Hopefully, this article stressed the importance of brokers when selling your business. If you’ve decided it’s time to sell, reach out to a business broker for help getting prepared ASAP.