Should you hire a business broker, and if so, why? This is the question anyone wanting to sell their business and looking at hiring a broker would ask. For us, hiring a business broker is the most convenient solution to selling your business, especially if you’re too busy running the day-to-day operations of it.
In this article, we’re going to look at the benefits of hiring a business broker and whether or not it’s the right course of action for you to take.
What to consider when hiring a broker
Before we look at the benefits of hiring a broker, let’s consider what they’ll do for you. Business brokers essentially act as an intermediary between the seller of a business and the potential buyer. From when you sign your engagement letter with a broker, they’ll begin diving into your business, looking for ways to improve its appearance to potential buyers so that you can get a better price when it sells. They will advise you on things you need to change and any legal obligations you have before putting the business on the market.
Then, they’ll most likely contact their network of investors and buyers first, reaching out to individuals or corporations who’d likely show an interest in purchasing your business. Once they’ve received a notice of intent, they’ll begin narrowing down potential buyers into a shortlist they’ll show you. Once you’ve found the right buyer, they’ll sort out the due diligence and the negotiations to ensure you get the best price. And, finally, they’ll close the deal, take their commission, and you’ll get paid. With that in mind, consider these factors when you hire a broker:
- Experience on the job
- Reputation
- Average turnaround time for transactions
- Their commission rate and fees
- Their marketing strategy
Benefits of hiring a business broker
Now that we have a rough understanding of how a business broker works and what you should consider before hiring one let’s look at some of their benefits:
Help keep emotions in check
Selling a business that you’ve given much of your life to the building might jog up some emotion that leads you to unrealistic expectations about its worth and how to process its sale. By hiring a business broker, you’re essentially removing yourself from directly dealing with the sale and placing someone in that position who can look at the sale objectively to make an appropriate decision.
Remember, a business broker’s job is to protect your interests as best they can while processing a fair sale for all parties involved. So, they’ll try their best to catch your vision for the business and to find a buyer who does the same, however, their job is also to take the emotion out of the sale.
Increase your business value
Remember what we said in the example above? One of the first things a broker will do is inspect your business to find ways to improve it, drive up its value, or mitigate legal issues. To do this, they’ll go through every aspect of your business.
They’ll assess your reputation by talking to customers either personally or through online surveys. Through this, they’ll work out who your customers are and whether there’s potential in your area for something more, which can be a selling point on its own.
Aside from customer satisfaction, brokers will also assess your business operations. Things like your website, assets, financial status and records, and your team of employees are all factors that contribute to the value of your business. By thoroughly inspecting these factors, they’ll find ways in which you can improve them and your business value.
They know how to market your business well
Business brokers know what sells and what doesn’t. In most cases, they’ll have extensive knowledge about the industry your business is in and what potential buyers are looking for. This expertise allows them to effectively market your business to these individuals, customising your campaign to exactly what they’re looking for and strengthening your chances of finding a buyer sooner.
They have a network of potential buyers
Speaking of potential buyers, another bonus of using a business broker for your sale is that they usually have their own network of contacts who are in the investing business. A reputable broker will have a network of investors who they give priority before opening up the sale to the public (in certain cases). Some business sellers don’t want a buyer who will come along and strip their business down for parts; they want a buyer who will continue its vision and take it further than they could. By presenting your business to their own network of buyers, they can find you someone who will share your values and convictions regarding your business, allowing you to get the right buyer sooner.
They will handle the administrative work
Finally, this is the main benefit to consider. They handle all of the paperwork. Selling a business requires a lot of administrative work. That, on top of running your business, might feel overwhelming, But by hiring a broker, you avoid the paperwork altogether, except for signing and filling out a few forms. Remember, this doesn’t exclude you from following the suggested changes the broker makes to your business, though.
Final Thoughts
Let’s say you decide to sell your business yourself. You’ll have to do everything, from inspecting your business the valuation, and all the paperwork. This, while running your business, is a heavy load. That’s why hiring a broker is so beneficial. They lighten your load and have your best interest in mind when selling your business. Are you looking for a reputable business broker to help sell your business? Or maybe you just want some advice. Either way, Lloyds brokers would be happy to help!
