Achieving the best price possible is your ultimate goal when selling a business. If you have little experience when it comes to selling a business, it might be in your best interest to acquire the services of a business broker. Business brokers usually have a database of potential business buyers ready and waiting for their call once a business for sale matches their requirements. However if you do have experience in selling businesses or you feel confident enough to sell your own business there are many business for sale websites which will assist you with your sale for a small fee. Finding a business broker is your next step.
When you start your search, ask your friends and family first. Maybe they have had a good experience with a local business broker and can highly recommend them to you. Or they might know someone who can not speak highly enough of their broker. Word of mouth is a great tool. Your business accountant or lawyer will also be able to point you in the right direction.
When there is a buyer interested in your business, they will show due diligence and it is crucial that you also show due diligence when selecting a broker. Once you have narrowed it down, you should always perform a background check to ask questions like, ‘are there any current or old law suits against this firm’. Also ask for a list of previous businesses they have sold so you can get in touch directly with ex business owners and ask for a testimonial about there experience, and another important question to ask is if they have sold a business similar to your business or industry.
Make sure you ask the question whether your broker works full time as apposed to a part time broker. A full time broker obviously has more experience and ultimately would be more successful. This broker will also have an understanding of current market trends, allowing him to value your business accordingly, but don’t rely on the broker’s valuation alone. It is always advised to seek a second or third opinion from your accountant, lawyer and independent business Evaluation Company. Just ask your accountant to point you in the right direction.
Keeping the sale of your business strictly confidential information is a great way to not scare your staff into looking for another job or spreading the word that there might be financial issue to regular clientele. Another reason to keep things quiet is the fact that your business suppliers might become hesitant with supplying you stock, disrupting your business operations. Your business broker needs to ensure he follows your instructions and signs confidentiality agreements. All potential buyers should also sign this agreement.
Most broker commission fees range between 8% and 15%. Any broker who asks for an upfront fee should be avoided because a broker who is confident of the sale will not ask for this. Never allow a broker to pressure you into a sale. They are looking for a quick sale and will usually push you to take what is offered. Stick you’re your guns when in the negotiation process and you decide when the price is right.
