Dallas business broker, Bill Whitehurst, explains what a business broker can and can’t do in making sure the deal is closed and getting all parties on the same page to get a business sold.
Question comes up regarding business brokers from a business owner seller standpoint is what can or can’t a business broker do for me?
The easiest thing is to talk about, first, what can’t a business broker do for a seller? First of all, the business broker cannot give out tax advice. The CPA of record for the business is the only person that is capable and licensed to give out tax advice for the business owner.
The business broker should be knowledgeable and general implications of tax to business sale but the business broker has to make sure and defer all tax specific tax questions to the CPA. Likewise, a business broke cannot provide legal advice.
There are sometimes some fine lines that come up and the experienced business broker knows when to stop talking, and tell the parties, usually the seller, “I can’t give out this advice. You need to seek the advice of your attorney.” The business broker cannot give tax advice or legal advice.
On the other hand, what can a business broker do? One, a business broker can develop an opinion of value to establish the offer price for the seller, and what the business will be offered for. The business broker can also substantiate that price from comparable sales that the business broker knows of, or is involved with.
The business broker is, so to speak, on the street, and knows the post of the market, and can factually determine the price of the business very accurately. The business broker is able to talk to many buyers, but do it on the confidential basis.
Business brokers will get a nondisclosure agreement signed by the buyer, will get the buyer’s profile even before that buyer learns the name of a specific location of the business. This fashion the broker, or business broker is able to talk to the whole world, so to speak, but not divulge the price of the business.
In addition to that, the business broker will set up buyer-seller meetings between the parties, in which the buyer and the seller will meet, usually in the evenings or weekends to preserve confidentiality. The business broker will work with the buyer in developing a letter of intent, which is a non-binding offer from the buyer to the seller to buy the business.
After the letter of intent is signed, the broker will assist in due diligence, helping with due diligence, make sure that flows properly with the buyer. Looking over the seller’s records. Also, the broker will work with the due diligence of the third party lender, if there’s one involved, assisting the buyer in getting a loan.
Broker will set up closing and also work with the parties’ attorneys to help get the final contract of sale devised.
An experienced broker will handle these steps all very confidentially. The broker will also be able to keep the deal, the sale moving forward and not let any one particular point stop the transaction.
These are all things that the business broker can and usually does in any business transaction.