A business broker is an important part of the chain between parties who are interested in buying and selling businesses. Like real estate brokers, they can represent either party. Brokers do not take possession of any goods or property, and they have no vested interest in the business that is being bought or sold. What brokers do is help bring buyers and sellers together, negotiate the terms of the transaction, and facilitate the process by providing their expertise and advice. The benefits of using a broker for a business sale can extend to both the buyer and the seller, regardless of who the broker actually represents.
Some of the many services offered by business brokers include:
For the Business Seller:
- Developing documentation for a company that will be needed by potential buyers. This includes business plans, business history, tax information and profit projections.
- Searching for potential buyers, which saves time and money and avoids missed opportunities
- Marketing a business toward potential buyers. Brokers have extensive contact lists and networks of real potential buyers, instead of those who are just there to kick the tires.
- Screening potential buyers for their ability to actually complete a suggested purchase. A potential business purchase could go on for weeks before it is revealed that the buyer does not have the available funds. Screening saves additional time and narrows the field to the most likely candidates.
- Consultation services that can be requested by either party.
- Assisting clients with discovering the MPSP, or Most Probable Selling Price valuation, of a business. A seller may have a set idea on the value of their business, but determining the MPSP requires an analysis of market information, comparable businesses and past transactions of a similar nature.
For the Business Buyer:
- When interested in purchasing a business for sale by owner, potential buyers first need to know what they are getting into. The business broker is experienced in the business lifecycle and in the local economy.
- Searching for potential sellers based on the needs of the client. The broker helps find likely sellers.
- Coordinating negotiations between buyers and sellers. Neither side may be experienced in the important details of a business transaction, but the broker will be. While most brokers will not perform actual negotiation services, they can be valuable in keeping negotiations between buyer and seller civil and on-point. This can help to facilitate a more agreeable transaction.
- If the seller needs more information or guidance regarding particular terms of the sale, the business broker can work to resolve complications that arise that might impede the sale.
Business brokers have the expertise to make any business sale a win-win solution. Much like in home sales, sellers may be too emotionally invested in their business to see the details of a sale clearly, and buyers may just not have the experience to follow through on a purchase. When deals become complex, buyers and sellers alike can become overwhelmed by the details. A broker can act as a buffer between buyer and seller, and ensure that a smooth transition and satisfactory outcome can be reached for both parties.