After 20 years in business the owner decides that it is time to sell his business. He thinks about calling a business broker, but decides to sell it on his own and save the fee that he would have to pay a business broker. Is this a good decision? I think if you interviewed the majority of owners who have attempted to sell their business on their own they would tell you that this is was necessarily the best decision. As a business broker I can tell you that close to half the calls I get are from business owners who attempted to sell their business and realized it is best to leave such an important task to a professional.
I can also tell you that if you interviewed the majority of my clients they would tell you that I must be out of my mind to be doing this for a living. Once they go through the process and see what it takes for a business to successfully change hands they have no problem what so ever signing my commission check at the closing. Let me give you ten reasons why my clients will tell you that if you are seriously considering selling your business you must retain an experienced knowledgeable business broker:
* Time Savings – Most business owners spend the majority of their business day managing their businesses. Selling a business is what business brokers do full time. Qualifying and working with buyers is a time consuming tedious process. An owner will have to make a compromise in the time that they normally dedicate to running their business.
* Experience – A broker has the knowledge and experience of selling businesses. Having this on your team will only increase the chances of getting the most value for your business and making it to a closing.
* Realistic Valuation – It is my experience that most business owners feel their businesses are worth a lot more that what the market dictates. When one goes to market at a price that is too high they risk losing many qualified buyers. This will also increase the time it takes to sell their business. In some cases an owner will price their business too low forfeiting dollars on their selling price. An experienced business broker will perform a market valuation so the asking price is realistic.
* Marketing expertise – A good business broker knows where to and how to advertise your business. They have databases of buyers of which many might be looking for a business like yours. They also proactively know where to find buyers that might not be looking at your ads.
* Financing – The majority of business sales involve some sort of financing. Very few buyers are all cash. A good business broker has banking contacts that will enable deals to get financed. They also can advise you about seller financing.
* Negotiations – In every transaction there are negotiations. Negotiating on your own behalf is similar to the saying “a lawyer that represents himself has a fool for a client.”
* Buyer experience – Most business buyers are first time buyers and do not have experience. A good business broker works and nurtures their buyers to make sure they make it to the finish line and close. They help them obtain financing and facilitate due diligence.
* Confidentiality – Most business owners are very concerned about confidentiality in a transaction. They do not want their employees, customers, vendors, and competitors to know they are up for sale. An experienced business broker is accustomed to taking all precautions in keeping the sale confidential.
* Closing deals – I always tell my clients not to get excited when I bring them an offer that they are pleased with. A good business broker earns their stripes getting a deal from accepted offer to a successful closing. So many obstructions present themselves during this process and a good broker will constantly be thinking creatively to move deals along to the finish line.
*Business brokers work for free – That’s right, most business brokers work on 100% commission so if they don’t find a buyer they do not get paid. Do you know a lawyer, accountant, or a consultant that will work on your behalf and in some cases for up to a year and possibly not get paid?
Selling a business is the most important decision many entrepreneurs make in their lifetime. Their companies in most cases represent the bulk of their net worth as well as the majority of their retirement savings. Is it really something they should risk by trying to sell on their own?