What is a Business Broker?
Whether you are buying or selling a business, it’s important to recruit a professional to represent you in this transaction.
What is a Business Broker?
A business broker is an individual or firm that represents the seller in the sales transaction of a business. The broker handles the paperwork involved in the drafting of a sale, helps to negotiate the best sale price, and guides the sale through a lengthy due diligence process. Though business brokers can help on both sides of the transaction, brokers tend to get involved on the seller’s side.
What Does a Business Broker Do?
A business broker handles the financial and marketing aspects of a sale, substantiates a company’s value to a buyer, and facilitates the communication process between buyer and seller. A broker is your expert and guide in determining how much to sell your company for and to whom. There are many decisions along the way to selling a business. As you approach your decision to exit, there are questions that arise like:
How much constitutes a good offer on a sale?
What information should I disclose and to whom?
How do I let my current staff know what is happening?
How do I personally handle the transition?
A business broker handles all of this with ease, guiding the client through each step in the process of handing the business off to a new owner. A huge facet of this process is communication.
Selling Business Brokers
But what does a business broker do exactly? Business brokers on the seller’s side of the transaction do a number of things. A business brokerage firm might help to prepare a company’s financials to present to buyers and illustrate a business’s projected growth. A selling business broker might create a document vault for all matters pertaining to the sale, and assist the owner with communication strategies to keep the team informed about the sale. They might handle buy-out terms, ensure agreements are met, and the company has a plan to retain its profitability so that both owner and seller meet satisfactory terms. Selling business brokers are worth every penny for helping an owner have peace of mind and organization as they move into the new territory of the business-for-sale market.
Buyer Business Broker
On the opposite side of the table, there are business brokers who handle the buyer’s end of the deal. This is an intermediary who is concerned with promoting the buyer’s interests in the deal. It is essentially the analogous representation to what the seller has in the transaction. A buyer’s broker will likely provide strategic services in helping a buyer know they are getting the best deal possible. This might include helping to approach businesses that might be in the right market, negotiating a fair price for the buyer, examining the terms and conditions of the sale, and coordinating the close.
A business brokerage firm is involved with both teams of financial and legal advisors vying for a common goal: a fair outcome for their clients. These advisors, however, have experience navigating these kinds of deals more frequently than the average business owner and will help handle the transaction in the most professional, streamlined fashion. Moving the buyer and seller toward an agreement can be a complicated process, but with the right help, it doesn’t have to be.
Business Brokerage: Choosing the Right Partner
There’s a lot that goes into choosing the right business brokerage partner, but it all comes down to trust. Choosing a business broker should involve a lot of background researching credentials, certifications, number of past sales, and investigating any registered complaints against them.
The process is similar to vetting any professional partnership. Take time to consult with your selling business broker to ask a lot of questions. Understand the role and responsibilities they will have in the sales transaction, which services will be covered by their fee, and how the broker will be compensated.
Determine if any special experience is required to sell in the business market you are in and search for talented brokers in this space. Experience in this industry might be essential to ensuring you receive the highest multiple as the seller.
Networks are also important to consider when finding the right business broker. A good broker will have a variety of professionals at the ready to help with your sale, including lawyers, accountants, and other local advisors.
Lastly, availability is very important to ensure with choosing a broker. Often, things move swiftly with a business sale and the broker should be at the ready to ensure things with the sale move along in a timely manner. Ask ahead of time how often the broker will be available to you as a client to achieve a successful sale.
Utilizing Coachwell’s Business Support
Achieving a successful sale is some combination of the right talent on your side mixed with the right opportunity. Getting help with your exit plans is a wise choice to ensure everything goes as planned and you are able to get the highest price for your business. Gathering the right team of advisors can help you assess the viability of both the buying opportunity and whether it is the right time for your company to sell.
If you are ready to seek support for your business sale, Coachwell provides an M&A consultation. We are ready to assist with each one of your business needs. A discovery call will help us get to know more about you, your business, and your goals. Know if the timing is right to take the next step to sell your business.
