A professional business broker helps people looking to sell or buy a business in the selling or buying process.
The broker estimates the value of the business in question and advertises it for sale. He or she handles interviews and negotiations and facilitates the progress of the deal. This is the reason it is important to work with professionals.
Essentially, business brokers undertake a wide range of tasks aimed at helping their clients achieve their objectives. They earn money through commissions based on a percentage of the money realized from the transaction. Regulations for such professionals vary by state. Some jurisdictions do not require licenses, while others do.
Understanding the Work of a Professional Business Broker
The process of transferring ownership of a business is quite complex. Challenges here include determining a business’s fair value and ensuring the company’s finances are in good order. Negotiating a good price and facilitating escrow on behalf of the two parties involved is challenging. Closing the transaction can be challenging too.
In addition to managing these processes, a professional business broker will ensure confidentiality. These professionals require potential buyers to agree not to advertise or disclose the specific details of the potential sale.
Thinking of Hiring a Professional Business Broker?
If you are, you need to ask yourself several important questions before making a decision. Most importantly, however, you will need to hire a certified, experienced, and qualified professional to help you. Before hiring anyone, you may want to speak to at least three professional business brokers in your area. Some of the most important things to consider include:
- Whether the broker is a member of the International Business Broker Association.
- Whether he/she holds the certified business intermediary designation.
- How many deals the business broker closes each year.
- What designations or certifications the broker holds regarding business valuation.
- Whether he/she works full-time as a professional business broker.
- How long he/she has been in the brokerage business.
- The broker’s online reviews.
- How long the broker expects the deal will take to close.
- How much he/she can sell or buy the business in question.
Benefits of Working With a Professional Business Broker
Not all business brokers are the same. If the professional you are considering does not provide the benefits outlined below, you should choose a different one who does. Some of the benefits you will get when you work with a professional business broker include:
This is one of the most important aspects of working with a business broker. He/she should maintain confidentiality throughout the selling/buying process. If competitors, employees, suppliers, or consumers learn that the business is for sale, it may lead to negative consequences. These include changes in purchasing agreements, decreased sales, and high employee turnover.
Many business buyers require some financing to help them close the deal. This may be in the form of a small business administration loan. For people who are not familiar with the process of applying for such a loan, it can be quite confusing and frustrating. Professional business brokers have a network of lending institutions. They also have the experience needed to provide financing assistance to buyers.
Large Marketing Network
If you are selling your business, you will need maximum exposure to potential buyers. A good business broker will use all resources available to him/her to properly market your business. He/she will bring a high level of marketing savvy to every opportunity he/she represents.
When you work with a professional business broker, you will also gain from expertise, a one-on-one relationship, and no upfront fees. You will also enjoy selective representation.
These are the main reasons why it is wise to work with a professional business broker to maximize the value of the deal.