Selling a business is best handled by people with the expertise to do it right. Many entrepreneurs take justifiable pride in their ability to run their operations. They may have started from scratch and built a successful venture, which is now a valuable asset. When the owner decides to sell, the biggest mistake he or she can make is to go it alone.
The business broker usually has a background in marketing, finance and all of the intricacies of running a business. The broker should also understand human nature.
Selling a business is a process, a long, complicated and sometimes stressful process. The experienced broker takes the seller by the hand and guides him through the process and strives to get to a satisfactory sale. What you need to know first before hiring a business broker.
The Process Of Selling My Business
The decision to sell is one of the most important decisions an entrepreneur will ever make. It can also be the largest financial event of his life. Once the business owner has made the big decision, the next decision should be to contact a business broker. Can it be handled by the owner himself? The answer is “yes but.” Yes you can sell your business, but you are likely to come out ahead if you hire the right person to help you do it. As you read through the steps in the process, you will see that the services of a professional business broker are needed. Here are the steps:
Finding A Buyer for My Business
An experienced broker has a long list of contacts in various industries. Besides his own list, he has access to his contacts over the years. The most important factor the broker brings to the game at this point is confidentiality. He can ask questions that the seller would find awkward. The ability to say “I have a client that may be a good fit for your business” cannot be overemphasized.
Determining The Price For My Business
An experienced business broker knows the industry formulas for the selling price of various types of business. If he doesn’t know the formula, he has access to sources that do. In some industries, for example, a typical selling price is six times the adjusted average of the past five years. Whether the business can be sold for more than an industry average is where the broker earns his fee.
Nowhere is the value of a third-party (the broker) more evident than in the negotiations for the sale. Say, for example, the buyer wants to make an offer. It’s communicated to the broker, who will calmly say that he will discuss it with his client. For a buyer and seller to discuss this face to face requires poker playing skills.
The Terms Of The Deal
The broker will help the seller decide if the deal should be cash, cash and stock, or an earn-out where the owner gets paid for staying on. The broker knows the up and down sides to every offer and will help his client decide. Understanding how to structure the sell of your business.
Selling a business is a complex task. It requires the seasoned expertise of a professional skilled in the details of mergers and acquisitions.