- If you're looking to buy a small business or sell your business onto someone else, you may be wondering whether or not you should hire a business broker.
- What is the role of a business broker and is it worth hiring one?
- In this article, we look at what a business broker does and how they can help you buy or sell a business.
As a business person who wishes to buy or sell a business, you might be wondering if you should consult a business broker or not. Apart from selling a business, you might just wish to know who business brokers are and what they do.
In this article, we delve into the role of business brokers and how they can help you in business sales.
What is a business broker?
A business broker's main focus is helping people buy or sell a business. They are professionals in what they do and have inestimable knowledge and experience when it comes to business trading, i.e. buying and selling a business.
Business brokers are people who understand the local market and can guide you and prevent you from making harmful mistakes.
What people commonly misunderstand is the differences between buying or selling of a business and buying or selling real estate, which many think are the same, but are totally different.
How can a business broker help you sell a business?
Making a decision to sell your business is a very big step. Possibly it may be because you are retiring, or you just want a change of business or lifestyle. In some cases, the decision may come about due to health reasons.
Whatever the case may be, your business is your valuable belonging, and as a result, you are extremely protective of it.
Business brokers understand this and recognize that it's not just about selling the business. It's about getting to know who the seller is so that they can find a like-minded buyer who can take the business to the next level.
Based on initial meetings with a seller, and after reviewing pertinent documentation such as financials, lease and or franchise agreements, the first step to having a successful sale is to correctly "value" the business.
A business broker is likely the best person to do this. They can then advertise your business for sale, (without disclosing its name or location), handle potential buyer inquiries, handle negotiations, and finally assist in the closing process.
The procedure of selling a business is complex and time-consuming, so using a business broker will allow you to continue focusing on the operation of the business and in turn, maintain the value of that business.
How can business brokers help someone looking to buy a business?
A business broker has an absolute understanding of several core areas of business and based on their experience can identify any area of the sale that could be a potential concern to a buyer.
For example, do the financial statements look reasonable for this particular type of business? Are there concerns with the lease or franchise agreements? What financing options are available for purchasing that type of business?
It is important to recognize that emotions can cloud one's judgment, distort reality or distract an individual’s perception of an opportunity. It's where glowing issues can be missed or assumed to be not of any particular concern.
Likely, due to the buyer's overwhelming thoughts of money pouring into their bank account, a business broker will at least, help ground you and offer you a more objective opinion on the situation.
Have you ever hired a business broker to help you buy or sell a business? How did you find it? Share your thoughts in the comments below.
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