Take your time and start looking around. If you have a small bar for sale you will have different requirements than if you have a huge hotel or perhaps a car parts factory for sale. Different businesses will have different insider elements, and usually not every broker is prepared to sell any and every type of business.

There are literally dozens and dozens of articles on the internet claiming to guide and show you how to choose a business broker: from checking the brokers qualifications, to checking association memberships, or asking for references. Without saying these things are pointless, I do want to stress that it is of much higher importance to find a broker who knows what he is doing and really cares about selling your business.

Place it this way, if a broker is highly “qualified” and a member of this, that and the other “association” that does not for sure qualify him as the best broker for you. A broker, who has hundreds of listings, may be more self-centered about his own image or too proud of his huge portfolio to even go a finger and try and sell your business than a broker who has just a select few businesses for sale.

Let me give you an example, if you have a restaurant for sale, then why list it with a broker who also sells car wash businesses, gas stations, hotels and toy stores? Wouldn’t it make more sense to give it to someone who specializes in restaurants? Just like if you want to sell a shoe manufacturing business, then listing it with a broker that specializes in nightclubs may not be your best bet.

Now that you narrow it down, check their channels of marketing. “Broker A” might have a nice fancy office on the main street and regular weekly adverts in the most glossy local paper, but “Broker B” might be very well connected among local [insert your business type here] business owners and investors. That may be worth much more to the sale of your business!

And last but not least, listen to your broker. If your broker is telling you he will land your [expected] price without a doubt and surely within just a few weeks, then this is probably too excellent to be right. Especially now in 2008, where half the world is in a global crisis, this may not be realistic. Make sure that the broker you choose to sell your business is realistic! Much rather he tells you to come down from your high horse than tell you fairy tales – right?

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Expectations as a Business Seller

When you deal with business brokers to help you sell your business there are a few things to keep in mind.  You should have some expectations of what business brokers can do for you and what skills they can bring to the table to help you find the right buyer.

One of the main questions you need to question business brokers is how they will help you prepare your business to be sold?  Will they be able to indicate to you certain actions you can take immediately to help your business shine in the eyes of a buyer?   For instance, can they advise you on how your shop presents?  Perhaps some quick improvements or changes can be made.  They can let you know some of the common questions that are questioned by business buyers to help you anticipate what information you will need to prepare.  Example – do you have your financial information in order, have you retained the services of an accountant and lawyer to help guide you through the process and so on.  Experienced business brokers can point out some of the quicker issues that can be resolved immediately before you start meeting buyers.

Business brokers can also help you establish a selling price for your business.  They can guide you through the methodology to derive a honest price.  There are different business valuation techniques that can be used – earnings multiples, asset-based valuation, discounted futures cashflow method, etc.  While you may not need to know the ‘nuts and bolts’ of these techniques used to value a business, excellent business brokers should make you know the logic and though process used to determine a selling price.  Also, don’t merely rely on the value a business broker may help you derive.  Talk to your accountant or a business valuator – a excellent broker should have no problem if you choose to do this.  If they do, then that can be a red flag.

Excellent business brokers will maintain the confidentiality of the business sale while they find you a excellent buyer.  Selling a business is a much different process than selling real estate and reputable business brokers should be able to keep your confidentiality intact.

A business broker will help you present your business to business buyers.  They will help in the communication process and ensure that there is full transparency on the part of the buyer and seller of the company.  Business brokers will be the go-between to ensure no misunderstandings and to make sure all questions are answered.

A business broker will also help in the negotiation between the buyer and seller and properly present the offer to buys as well as subsequent counter-offers, etc.

During the due diligence process, business brokers can be excellent intermediaries as well.  Selling a business requires that buyers confirm facts and do a thorough examination of the business.  This can be a lengthy process and complicated or, with the services of competent business brokers, be much smoother and less hard.  Many deals are lost during due diligence that ultimately resulted in flared passions and misunderstandings.   A business intermediary can help mitigate this.

Please remember that selling a business is a completely different process from selling real estate.  Competent busies brokers are trained and licensed professionals that will help you ultimately realize your business sale, which is the ultimate goal.

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Are you looking to buy a business? Or maybe sell one? Before you go very far in the sales or buy process, you’ll need to choose whether you’re going to handle everything yourself or use the services of business brokers. How can you best make that choice and what factors should you consider? Lets look at some of the pros and cons of business brokers.

Business brokers are third parties that handle the details when you buy or sell a business. They aren’t the business owner who is selling, nor are they the buyer who will soon own a new business. They are essentially like real estate agents, professionals who bring buyers and sellers together, facilitate the negotiation, and handle the transaction once the deal is made.

The Pros of Business Brokers

There are several excellent reasons to use business brokers instead of handling the business sale yourself. One of the best reasons is time savings. Selling a business can take a particularly large amount of time. There are many documents that are required before the sale can take place. You can either take the time to place this documentation together on your own, or you can let a business broker assemble these documents for you. If anything, documentation requirements increase during the sale process.

Business brokers can also save time by qualifying prospects. Advertisements that let everyone know your business is for sale may attract potential buyers who really don’t have the potential to buy at all. Business brokers are experienced at weeding out the “tire kickers” and bringing only the serious buyers to the negotiating table.

In fact, if business brokers are doing their jobs well, they should be maintaining lists of prospects who are ready to buy. If you choose to sell your business through a broker, advertising the sale might not even be necessary. If you’re interested in buying a business, you may be able to find the sort of business you’re looking for more quickly by working with business brokers.

Another excellent reason to use business brokers is being able to profit from their experience. If you’re buying a business, you may have already bought several and have all the experience you need. But, selling your business typically occurs less often, so you don’t have as many chances to learn how. Because brokers buy and sell businesses all the time, they have accumulated quite a bit of experience.

Business brokers are often used when buyers or sellers want to maintain confidentiality. In some arenas, all the players are so well known that the market itself could be changed by knowledge of a pending sale or buy.

The Cons of Business Brokers

Maybe a better way to word that would have been the “downsides” of using business brokers. There’s really no reason to expect that business brokers are likely to con you, but there are a couple of reasons why you might want to consider selling or buying a business on your own.

First of all, remember that business brokers charge commissions. There is a lot of work involved in these types of transactions, and if a broker is going to handle everything, he’s going to want some compensation out of the deal. Someone, either the business seller or buyer, will be charged by the business broker.

There’s no guarantee that business brokers will have your best interests in mind. Again, like a real estate agent, the broker will either be working on behalf of the buyer or the seller. The information that he provides about the business will probably be truthful, but might be “spun” to make a business more attractive to increase the chances of a successful deal.

If you’re buying or selling in a specialized industry, business brokers might not have the specific industry knowledge that’s required. In these cases, you’re probably better off working on your own if you have insider information that’s hard for those outside the business to comprehend.

Finally, a broker might not have your passion for the business or the strong desire to see the deal completed. You should keep in mind, though, that passion and emotion generally don’t belong in the sale or buy of a business. The emotional detachment of a business broker might be exactly what you need.

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If you’re considering selling your business or buying a new business, it won’t be long before you start to wonder if you need a business broker to handle the deal. Whether or not you really need a business broker depends on how much of the deal you intend to handle yourself. The following article covers some of the issues you should reckon about when trying to choose if a business broker is someone you need or someone you can do without.

Exactly what are business brokers anyway? Business brokers are firms or individuals who take care of the details when businesses are bought and sold. Brokers are a third party in the transaction–that is, they aren’t the seller or the buyer of the business in question. They function in the same way as real estate agents. Their role is to bring together sellers and buyers, expedite the negotiations and handle the details of the transaction in the event of a successful deal.

Excellent Reasons to Work with Business Brokers

There are some brilliant reasons why you should consider using business brokers instead of going it alone in the transfer of business ownership. The advantage most people site is time savings. The sale or buy of a business can be a time-consuming affair. Gathering the required documentation alone can take what seems like forever. Business brokers have a lot of experience assembling these documents on your behalf, which frees you from taking the time to do it yourself.

The qualification of prospects is another area where using business brokers has the advantage. It’s particularly frustrating when you spend time courting someone who seems like a serious prospect, only to find out they don’t have the means to buy your business. If you want to be sure that you only work with buyers who really have the capability to buy, then you can let your business broker know that you only want to talk to qualified buyers.

Most skilled business brokers keep an up-to-date list of prospects who are ready and able to buy your business. In some cases, there might not even be a need for advertising or listing your business for sale. If you’re in the market to buy, brokers should have a portfolio to offer you. Once again, you see how using the services of business brokers can streamline the entire process.

When you enlist the aid of a business broker in the buy or sale of a business, you’re also accessing their experience. For some business buyers, this is not an vital issue–they already have experience buying businesses. But, business sellers are often less experienced in this type of transaction because people generally take the role of a seller less often. Brokers have accumulated a fantastic deal of experience through many transactions. There’s a excellent chance you will be able to benefit from their experience.

Finally, business brokers can help you maintain confidentiality. The larger your business happens to be, the greater the need for confidentiality in the sale process. The whole deal could be negatively impacted if news of an impending sale becomes too widely known. It could cause fluctuations in the offers and also demoralize your employees. Business brokers are well-practiced at keeping these sales confidential.

Reasons to Avoid Working with Business Brokers

Most business brokers are honest, legitimate businessmen who happen to succeed when you do. In most cases you will share common goals (the sale or buy of a business). Business brokers thrive on referrals and recommendations, so they want your experience to be positive. But, there are reasons why you might want to avoid signing up with business brokers for the sale or buy of a business.

Working without a broker may end up costing you less. Keep in mind that business brokers earn money through their commissions on the sale of a business. The amount of work they place into the transaction certainly is worth some amount of compensation. Either the seller of the business or the buyer will be responsible for paying a commission to the business broker.

Sometimes you have to wonder what a business broker’s right motivations are. Normally business brokers work on behalf of one party or the other. His business and perception of successful depends on his ability to facilitate successful negotiations and complete a sale. You probably don’t have to worry about getting factually incorrect information about a business from the broker, but you do want to watch out for “spin” that makes things sound more attractive than they might be.

In some technical, specialized businesses, brokers might not possess knowledge of the industry details that is needed to successfully complete a sale. If you’re in the market for a business that is based on specific industry knowledge, then you might be better off working on your own instead of spending all your time educating the business broker.

Finally, remember that the one person in the group who has a passion for your business and is keeping your best interests in mind…is you. But, at the same time, passion and focused self-interest might not provide the best support for a successful sale. You may want to hire a business broker simply for the emotional detachment he’ll bring to the deal.

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