The Risks and Rewards of Selling a Business

As leading business broker Tim Luscombe can confirm, there are no standard rules about evaluating whether selling a company is a good idea or when to sell a business for optimum rewards.

Mergers and acquisitions, outright sales and collaborative agreements are all part of modern business, but deals do not always work out in the way that they were expected to by key players.

It is imperative to measure the risks and rewards involved in selling a business prior to taking any action. There are numerous benefits to selling a business, moving on to another project or retirement, and mergers could present the wisest option for others.

For every advantage there is a disadvantage which can’t be ignored and should be pragmatically dealt with from a strong position to diminish issues further into the process.

When to sell a business, brand strength, business prosperity, employee factors…there are many areas to mull over.

An expert opinion

Tim Luscombe is a business broker, financial consultant and Thames Valley Business Advisors member who works with businesses, primarily SME’s, on projects from simple transactions to complex mergers and acquisitions.

Here, he looks at the rewards and risks of selling a business.

Rewards

What is your primary motivation for selling a business? Now, and in the future. The rewards are determined by your response.  One example might be long term capital to fund retirement. Another to embark on a new project.

Rewards include:

  • Improved services and products for customers.
  • Better access to internal company resources.
  • Organic growth through shared experience and knowledge.
  • Better company performance from increased size.
  • Reduce costs that come with size.
  • Greater access to vendor products and services.

Risks

When selling a private sector business or agreeing to an acquisition of a public sector one a risk assessment is essential. No sale is 100% safe so identifying risks like those below places you in a stronger position.

  • Confusing customers.
  • Alienating customers.
  • Disaffected employees who are resistant to changes.
  • Complicating or diluting the brand’s strength.
  • Complicating the decision-making process.
  • Damage to a company reputation.
  • Wasted resources.

The lack of pre-defined clarity surrounding selling a business can leave owners in a hazardous position.

Why are you selling a business?

As mentioned above, please ask yourself why you are aiming to sell, your response will dictate the next step and implementation of the idea.

How to achieve this

The next consideration is how the sale, merger or acquisition can be achieved. A comprehensive review of risks and rewards makes the process more positive and considerably less confused or stressful.

Minimise risks; maximise rewards.

Utilising the skills of a professional, experienced business broker proves invaluable for a smooth sale. They’ve been through numerous sales and unlike many of their clients have a full understanding of requirements and processes. As third-party experts, they look objectively at the risks and rewards and communicate the short and long-term ramifications of selling a business. Brokers can help to negotiate a low risk, greater reward deal.

Please contact Tim for more information, he’s eager to hear from you.

 

Time For Certified Business Brokers to Apply Excellent Customer Service

As part of a thorough understanding about business operations, many certified business brokers consider themselves experts on excellent customer service. But when subjected to pressure from the clock and the competition, they might forget to practice what they preach.

Here are five fundamentals of good customer care that business intermediaries need to remember.

1. Available and able to communicate with clients on a 24/7 basis. It’s surprising how many brokers are not equipped or knowledgeable about using current media, such as Twitter, text messaging and instant messaging, to set appointments and exchange updates with clients. Most buyers and sellers rely on the latest technologies to exchange important information with their representatives. There’s no excuse for business brokers not to have that capability.

2. Willingness/ability to work with client learning curves. In the bustle of daily business it’s easy to forget that not all sellers and buyers are familiar with the terminology and protocols involved in business transactions. Just because someone is new to the game doesn’t mean he or she isn’t a serious and qualified client.

Certified business brokers endeavoring to be successful need to take the time–or make time–and have the patience to educate buyers who aren’t quite prepared to begin the search and sellers who don’t yet have their act completely together.

3. “Shooting straight” with buyers and sellers. It often is tempting to work with someone who says he’s a buyer and has the money to do a deal, but without determining whether he is truly motivated to make a purchase. Similarly brokers often take a listing for a business though there’s no landlord commitment and an incomplete set of records.

It’s a better use of the sales professional’s time and more respectful of the client to make sure all pertinent facts come out at the beginning. Send the buyer home to think about whether he’s really ready to make a commitment. And tell the seller her business will be marketable only when she’s got a complete package of financial and other information, along with a landlord or franchisor commitment.

4. Find a way to work with other brokers, even those without experience. It’s not just greed that causes many certified business brokers to decline requests from other brokers to cooperate on a possible deal. But if the inexperienced licensee really has a buyer for your listing, or has a business for sale that represents a good opportunity for your buyer, you have a responsibility to your client to work with the other broker.

Some skilled business sales professionals know how to forge an agreement with less-experienced colleagues, so that everyone wins. One approach is for the more experienced broker to handle the deal and pay a finder’s fee to the other sales person.

5. Going beyond continuing education. While certified business brokers have specific training in the offering and selling of small and mid-sized businesses, some don’t bother to gain extra knowledge that might help their clients. It’s important to be informed about various funding strategies, including where SBA-backed lending might be available and how to get it. And the broker who is well versed in the documents and agreements that will be encountered–financial statements, leases and escrow instructions– will be a valuable resource for clients and also more likely to be very successful.

It’s not that brokers are lazy or want to be careless about their work habits. But many are so pressed for time they often neglect to follow their own advice to clients and practice excellent customer service.

A Business Broker Can Help You Get the Best Deal When You Are Planning to Sell Your Business

A business broker is a firm or a person who assists buying and selling process of small businesses. If you are planning to sell your business, the right business broker can help you get the right price for your business of which it is worth.

A business broker is much more than just a middleman. Apart from exposing you to the vast pool of potential buyers of your business, most brokers also help in facilitating various transactions involved in the buying-selling process. Selling any business is a complex process and is extremely difficult to be carried out own your own.

Taking professional help will let you concentrate on your business till it is completely sold, while the broker will be involved in searching the right buyer for you. This will help to get rid of a lot of unnecessary worries.

Here are some reasons, why you should hire a business broker, if you are serious on putting your business for sale:

  • The know-how of the market and current worth of a business is crucial before you try to sell your business. Brokers are usually quite knowledgeable in this area and can usually derive an appreciably accurate value of your business.
  • Business brokers know how to package your business the right way and present it in a manner that would attract the buyers.
  • The database maintained by these brokers make it easier for you to find the potential buyers. If you find a listing in the ‘business for sale’ records of their database, a lot of buyers would be able to find you, if they are searching for something similar to what your business has to offer.
  • Confidentiality is one of the most important aspects that a business broker provides to its client, so that the present scenario of the business won’t be affected and the rivals and competitors of the enterprise don’t come to know that the business is for sale.
  • Business brokers are well equipped with the skills of converting seekers into buyers. For an individual it is very difficult to create competition among potential business buyers and competition is what fetches the best price in most cases.
  • The whole process, as we all know is quite complicated and many a times requires compromises on the sides of both the parties. A business broker acts as an intermediary and makes sure that best deal occurs between the two.