Anyone interested in buying or selling a business should always consult with a good business broker because they posses the know-how and resources to get the best price and help you avoid the devastating pitfalls of the buying or selling process. How do you find a good business broker? Well, you go out and look. Where? The internet of course, but asking someone who has sold or bought a business is also a good source and probably the better of the two. Unfortunately not everyone knows someone who has worked with a good business broker and must rely on the expansive web to begin a search.
You should begin your search before you commit to buying or selling a business. I once had a gentleman call me wanting advice on buying a coin laundry and we went through the process of buying the business, a few things to look out for and the general principles behind how a business is priced. After a little exchange of questions and answers between the two of us it started sounding as though this buyer had not done the proper due diligence and that he was possibly overpaying. Problem was… he was already under contract to purchase! At that point even the best business broker can’t help unless you are able to find a way out of the contract, which won’t be easy if the seller is getting a premium on the transaction.
A simple keyword search for business brokers will bring about a plethora of willing brokers but the trick is finding one that is good and easy to relate with. You shouldn’t be afraid to ask questions of the broker, i.e., “What’s your experience?”, “Do you have any credentials?”, etc. It’s always nice to work with someone that clicks with you.
Things process of selling a business and what a business broker can do for you are:
Step 1 is to contact small and medium sized Business Brokers for information about how they charge, what they charge and how you generally feel about them. Select a Small and medium sized Business Broker.
Step 2 is to work with your broker in establishing the most appropriate asking price and put broker and client understandings on paper in the form of a listing agreement. The listing price is the price you agree to sell the business if the broker brings a qualified buyer willing to purchase at that listing price.
Step 3 is to supply your broker with all relevant information about the small and medium sized business so that they can complete an offering memorandum. The broker will discreetly and confidentially make the market aware of your small and medium sized business’s availability including some general information about the site.
The 4th step is for your broker to screen and qualify potential buyers.
Step 5 is for you, with the help of your broker, to negotiate a price and terms agreeable to you and a buyer.
Step 6 is the removal of contingencies explained in the contract to purchase the small and medium sized business.
The final step is to close the transaction.
Your broker will continue to work with you after the sale with any remaining terms and/or conditions of the sale until the seller is completely separated from the business.
- Educate you regarding the process and issues faced when selling a small and medium sized business.
- Keeping the transaction confidential.
- Conduct a pricing analysis to determine the best asking price for your small and medium sized business.
- Develop an effective marketing strategy to sell your small and medium sized business.
- Put the offering package of the small and medium sized business in front of the most buyers.
- Pre-qualify potential buyers prior to divulging sensitive information.
- Manage transactional details and paperwork.
- Help establish terms of sale.
- Assist the buyer in an effort to give the transaction the most potential for a successful closing, i.e. financing.
The most important thing you can do when you are thinking of buying or selling a business is to at least speak with a broker or two. The good one is the one that gets you pointed in the right direction. Most brokers, especially the one that will care for your business, will be happy to spend a half hour to an hour talking to you on the basic points.