Should You Hire a Business Broker and Sell Your Company Yourself?
So, you have decided to sell your company and retire. Before you start daydreaming about a buyer calling you and eventually depositing thousands of dollars into your bank account, there is a lot that needs to be done.
The most important thing to consider is whether you should sell your company yourself or seek the services of a business broker for this purpose. You might be thinking to pass down your business to a family member. If that is the case, you need to consider whether they have an interest in running the business. You also need to evaluate whether they have the capability to take over your company. If they have the skills and are interested, then you probably won’t need to hire a business broker. You can just complete the paperwork for the transfer of your business with the help of a solicitor.
However, if you don’t plan to transfer your business to a family member and want to sell it to someone else, you should seek the services of a business broker. Here’s why.
Bringing Potential Buyers to Your Doorstep
A business broker looks for buyers with flexibility and great personal skills. Moreover, they will introduce you to multiple buyers, giving you several options to choose from. There isn’t any accounting for personal chemistry as you can only see that from spending time with the buyer. It is actually a two-way street since buyers also want to work with someone who is flexible and understands their needs.
A qualified business broker can help you interact with potential buyers through introductions and give you a background on them before the meeting. This makes it easier for you to focus on building a strong relationship with the buyer and determine whether they’ll buy your business.
Protection of Confidentiality
When you are planning to sell your business, it is imperative that your competitors, employees, suppliers, and customers don’t find out about it. It is tough to prevent the word from getting out when you are trying to sell the business on your own. However, business brokers have a lot of experience in protecting the confidentiality of their clients.
They’ll craft a summary of your company, providing information about your business but not highlighting its exact location or name. Before providing these details to the potential buyer, they’ll make them sign a confidentiality agreement to ensure that they don’t disclose the information to someone else. Before they provide the details to the buyer, they will also assess whether the buyer is qualified to purchase your company. This way, only a few people will know that you are selling your business and the word about the transaction will likely not get out.
If your company is profitable and you make over $400,000, you will be able to find a number of potential buyers. These buyers may include companies outside or within your industry, wealthy entrepreneurs, and private equity groups. Do note that it is not about finding a buyer who is interested; it’s about finding the right buyer for your business.
An experienced business broker will have a strong marketing strategy for generating buzz about your business. They will also weed out the uninterested buyers to ensure that you don’t waste your time on them. While a business broker is taking care of selling the business, you can focus on running it to ensure that it doesn’t go downhill just because you were too focused on the sale.
An experienced business broker will use their knowledge and insights to determine the buyers that are most likely to buy your business. They can also work with multiple buyers to create a bidding environment which may help you get a good price and provide you some leverage in negotiations.
When you are deciding which offer to go with, a business broker will help you understand which offer would be best for you. They will not just focus on the price but also the deal structure that would work best for you. Note that a business broker only makes recommendations; the final decision is up to you.
When you are selling your business, it is imperative that you do your due diligence to ensure that you don’t end up making a mistake. You will get different opinions from your family members, accountants, and solicitors, etc. A business broker can advise you on everything you need to do to complete a successful transaction.
A potential buyer may request a period of exclusivity to carry out their own due diligence. If they exceed this period and don’t move forward with the deal, a business broker can get in touch with other interested buyers to keep things moving in a timely manner. This way you won’t waste your time on a buyer who has decided against buying your business.
Closing the Deal
After the offer has been accepted or once the due diligence is done, the negotiation of the purchase agreement will start. Before hiring a solicitor, the seller and buyer would want to ensure that the deal is going to close. Your business broker will recommend solicitors with experience in closing business sales if you or the buyer needs a solicitor to close the sale of the business.
After you and the buyer have agreed on the purchase agreement, the next step will be the scheduling of a settlement date. Before the settlement, it’ll be ensured by solicitors that adjustments are made for the bills that haven’t yet been paid. Once the solicitors have done that and the settlement has been scheduled, you can sit back and relax. The deal is now good to go. At the settlement, you will just have to sign documents and exchange funds and any information related to the transition.
We hope that you now understand how a business broker can help you sell your company. If you want to sell your business faster and at a good price, hire a business broker. Without one, you will struggle to sell your company and your business may go downhill as you will be too focused on selling it and won’t be able to manage important aspects of your business.