Ready to sell a business but not sure how to get started? It’s always best to find a specialized intermediary who can help. Business owners who have never sold a business often experience a good deal of anxiety about the process, but working with a business transfer agent or a business broker will make the process relatively simple.
What Business Transfer Agents Do
Business brokers are intermediaries who specialize in handling the transaction of privately-held businesses. These intermediaries help sellers accurately value their businesses, advertise its sale, handle interviews and negotiations with potential buyers, and generally assist with the sale. The right business brokers will make it easy to sell a business and get a fair price for it.
How to Choose a Broker
Choosing the right broker requires doing a little bit of homework. Make sure to check the broker’s credentials and track record by asking about certifications and requesting client references. Don’t be afraid to ask questions about the broker’s experience and areas of expertise, and find out how he or she will advertise the business sale and screen prospective buyers in advance.
Broker Fees
Most business transfer agents work on commission. That commission is paid by the seller, which means it’s important to know what work the agent will perform to facilitate a smooth sale. Although 10% is a standard commission rate in the industry, it can vary depending on what kind of business is being sold and what services the agent provides, so it’s always best to find out about commission fees in advance.
How to Prepare for Sale
A broker can help his or her client get legal paperwork in order, review financial statements, and perform due diligence, but those aren’t the only things sellers should do to prepare. It’s important to consider everything from the reason for the sale to what kind of management succession plan will be put in place to transfer vital functions to the new owners. Potential buyers almost always have questions about the business, its current operations, and its future potential, so sellers should be prepared to answer those questions.
Common Issues to Avoid
Working with a broker allows sellers to avoid most of the problems that commonly come up when selling a business, but it’s still important to learn from others’ mistakes. First, make sure not to drop the ball by focusing exclusively on the sale. It’s equally important to ensure that business, as usual, is still good.
Next, make sure that any employees who are aware that the business will be sold understand how important it is to maintain strict confidentiality. Brokers know how to advertise a business for sale without disclosing its identity, so there’s nothing to worry about there, but it’s important for business owners and their employees to hold up their end of the deal.
Finally, be prepared to work with the broker. Some business owners think all they have to do is hire a broker, then sit back and wait. It’s always better to stay involved throughout the process and to ensure that potential buyers receive a great first impression of the business.
The Bottom Line
Selling a business can be stressful, but with the right broker, it doesn’t have to be. Find someone with plenty of experience and make sure to ask plenty of questions during the initial consultation. Follow the broker’s advice and stay involved in whatever ways he or she recommends to facilitate a quick sale.
