What are business brokers and what do they do?
Business brokers are similar to real estate agents; they are professionals who assist you with the buying and selling process but instead of properties, they deal with businesses. They can be an effective tool with their market knowledge and expertise to guide you better and provide sound advice if you wish to buy or sell your business.
What are the services provided by a business broker?
The services provided by business brokers may vary from place to place, but commonly they are dedicated to assist you with the following:
- Evaluate your business to determine a selling price for your business
- Drafting an offering summary
- Market the business in the best possible way
- Facilitating meetings between the buyer and seller
- Prepare the required documentation to close deals
- Conduct a detailed research on potential buyers
- Coordinate negotiations with the buyer
- Facilitating the due diligence investigation
- Provide support in the closing of the transaction
What should I know when working with business brokers?
Business brokers can represent either buyers or sellers in the trade process, although more commonly business brokers have represented the sellers. Whether you are looking to sell a business or to buy one, in the process if you ever wish to seek the assistance of a business broker, there are a few things you should keep in your mind while you are working with them:
- If you hire a business broker, he is going to represent you to get the best deal. Let him know your expectations but simultaneously listen to his ideas and discuss about market values since he can guide you better as you navigate the business trade process.
- Do not let any matters hanging between you and the broker. Be clear about the payment terms & conditions and his fees.
- Always be transparent over your financial comfort zone and business capabilities so that he is aware of your position and can help you accordingly. Communication is the key here.
- Choose well-established, licensed and successful business brokers as you will be allowing them to contribute their expertise in your life-changing decision, while maintaining confidentiality.
How much do brokers charge?
A broker usually charges a percentage of the selling price which is determined after careful assessment according to market trends. It also depends on state laws of the country you are based, typically it ranges from five to ten percent of the selling price of the business. Although, you should always ask before proceeding if any other fees are involved.
How to find a business broker?
Buying and selling a business can be a daunting process so it is best to be left to a professional to avoid any hassles but finding a reliable business broker can be challenging too. To ensure that you are about to hire a well-reputed and experienced broker, consider the following:
- Get a referral- It is better to go about these delicate issues following a recommendation from a trusted source.
- Choose a specialist- Check for broker licensing and its registration details before proceeding.
- Don’t be afraid to ask- A broker is a service provider and you have all the right to question about whatever concerns you.
- Check newspaper/online marketplaces for ads- Specialized business brokers facilitate the trade of businesses on other platforms where you can locate them.