Why use a broker

 

If you have already the read the section on selling your business you will now have an understanding on the importance of deciding how you are going to sell it. 

Any business owner who has sold a business on their own will reluctantly tell you how excruciatingly long it took and how it was a tedious, stressful and distracting process.  It consumes enormous amounts of time diverting you from important day to day operations.  When your focus should be on improving the value of the business, all of your time and energy is diverted to the sale process.

An experienced business broker can help guide you through the complicated process of selling your business but more importantly putting a professional business sales expert in between buyer and seller will yield a substantially better result.

When you want to sell or divest there are however many options

  1. Sell it yourself
  2. Use your accountant
  3. Use your lawyer
  4. Use a specialist banking service for the task,or
  5. Use a specialist business sales broker. There are many available and choosing the right broker and company is critical.

Selling it yourself

Positives and Negatives

  1. You know the business better than anyone else but are normally so entrenched in the business you fail to be impartial and unemotional in a direct sale process.
  2. You save paying a commission but it’s likely you won’t achieve top market dollar because of lack of market penetration.
  3. You give away the confidentiality around the sale at the first point of contact. This has serious ramifications on staff, suppliers and clients.
  4. Your focus is taken away from running the business to selling it. Most businesses need their owner’s undivided attention.

Using your accountant

Positives and Negatives

  1.  The accountant is an expert in producing the financial statements, their value is in their independence in calculating the adjustments and addbacks, substantiating other data, not in the sale and marketing of the business.
  2. Accountants perform an important compliance function for the business owner. They don’t market opportunities to other accountants for fear of losing the client. They are not sales agents, brokers or necessarily experienced negotiators.
  3. Their marketing reach is normally within their own client lists because historically they’re reluctant to advertise in the open market. 
  4. Buyers don’t see accountants as a source of‘businesses for sale’ 

Using your lawyer or a specialist banking business

Only on rare occasions do lawyers or solicitors take on a business sales role, they are extremely competent with the legal aspects of completing a sale especially where the buyer is already known, often however this process lacks any competitive process and the vendor will never know whether they achieved the best price. Using a specialist banking business will require the vendor to have a business capable of sustaining the fees this approach involves.

Using a Business Broker

    Ultimately the advantages of using a broker will far exceed the disadvantages.

    1. If you have never sold a business we will be your advisor and guide you through the process and it shows clear intent to buyers.
    2. We will ensure first and foremost that your business is ready for sale.
    3. We will provide the necessary focus to get the job of selling your business done.
    4. Using a broker allows you and your management team to focus on the business, allowing you to continue driving the business forward during the sale process making it attractive to buyers.
    5. We will appraise your business. Putting a value on it is far more difficult and complex than just looking at the financial results and putting a multiplier to the business profit. Our role is to uncover the the real underlying value of the business and ensure it goes to market at a price that will get several financially viable parties bidding for the business.
    6. A broker helps to control the timeline and dictate pace.
    7. Experienced brokers have established networks and strategic relationships, their market knowledge and research means they are able to locate and identify buyers who will be interested in your business.
    8. Most experienced buyers have acquired several businesses and have advisers experienced in the process as well whereas sellers are often selling their only business, an experienced broker will level the playing field for the vendor.
    9. Brokers know how to present and package the information in a way that reduces the opportunity for buyers to look for reasons to reduce the price you want for your business.
    10. A broker will be able to maintain confidentiality during the sale process while aggressively marketing the business, far more discretely than you would be able to.
    11. The broker you choose must be experienced in negotiating so they can negotiate the best terms for you. This will also lead to a competitive bidding process amongst potential buyers.
    12. Our sole function is to sell the business and the chances are we will do it in less time. The shorter the sale period the lower the risk of employee and customer defections or predatory competition.
    13. If the buyer has never bought a business, we will guide them through the process.

    Disadvantages to using a broker

    1. You will pay us a commission, but a good broker will ultimately get you a higher price than you would get yourself. This has been proven over and over, and we will take many of the hassles of the sale away from you.
    2. You may not know who the broker has contacted, feeling a loss of control, hopefully we will have saved you valuable time in not having to deal with lookers, tyre-kickers and discounters and put only capable and intentioned buyers in front of you .

    Ultimately the brokers role is as a negotiator bridging the differential between the parties  to find agreement, enabling both parties at the end to hold each other in high regard.

    Critical to getting the deal completed is the brokers ability to navigate the due diligence process which often raises complex issues which could prevent getting the deal over the finish line. 75-80% of all deals that fail are derailed because of mismanagement at the due diligence stage.