Advantages of Using a Business Broker

Posted on Thu, Feb 20, 2020

advantages-of-a-business-broker-4Building a successful business is an impressive accomplishment. Selling a business can be the business owner’s crowning achievement or, if done incorrectly, his biggest disaster. If you’re thinking about selling your business, consider the advantages of using a business broker. An experienced, professional business broker will ensure confidentiality, attract the right buyers, negotiate the best terms, and bring your sale to a successful closing.

Business Brokers Ensure Confidentiality

If word gets out that you’re selling your business, the game could be over before it has begun. Employees will hear about you selling your business and may become distraught or leave. Customers or clients may lose confidence in your products or services and look elsewhere.

A business broker acts as a shield between the business owner and prospective buyers, keeping your identity and your business’ identity confidential while fielding all inquiries and vetting prospective buyers. A broker will ensure that vetted buyers sign strict non-disclosure agreements before they reveal the business’ identity or any further details.

Business Brokers Have Broad Access to Business Buyers

Experienced business brokers know the market for businesses like yours. They can activate a broader network of buyers than a business owner could on his or her own. You may know one potential buyer, but your business broker will know many and will make them compete to buy your business. Your job as a business owner is to keep your operation running successfully, maintaining or even increasing revenues, while your business broker does all the work involved in selling your company.

Valuation and Marketing

Your business’ market value is not just based on a mere statement of taxable income. Business brokers build a case for how buyers will make money for themselves in the future if they buy your business. The broker takes many factors into account. Cash flow (calculated as adjusted EBIDTA—earnings before interest, depreciation, taxes, and amortization) is a primary concern; however, valuation also considers things such as trends in your business sector, location, competition, and proprietary products or trade secrets, among others. It’s the broker’s task to analyze these and other relevant factors, derive the highest obtainable selling price, and then professionally package the business to attract prospective buyers.

Managing the Process

Another reason to use a business broker is that your broker will manage the sales process. Selling a business is much more complicated than selling real estate. There are many steps in the process and many obstacles to overcome along the way. Brokers solve problems as they come up (they always do!), manage all the moving parts, and keep the parties involved (buyer, seller, lawyers, accountants, consultants, and financial institutions) moving forward toward a successful closing.

You’re an expert in running your business; your business broker is an expert in selling your business! If you concentrate on running your business while your broker invests a very substantial amount of time to value, package, market, and sell your business, your sale is sure to be successful!