15th May 2022
Business Broker Specialization & Role In Selling A Business
There are specialists in every industry and there are many advantages of working with an industry specialist. The methods and techniques used by a specialist are usually better and superior to any alternatives because it produces results that are significantly better, others do not have a standard way of doing things. To name a few in our specialization, business brokers comply with legal and ethical requirements as a fundamental way of doing business. There are several added benefits in working with a top business broker as detailed below:
We Speak the business lingo - Understanding the business jargon enables a business broker to better discuss the business with the owner, ask essential questions, and write the CIM to appeal to knowledgeable buyers. When selling a business on their own many sellers inadvertently hurt their own deal such as: Asking for an unrealistic asking price, rushing through due diligence, not disclosing important details, not offering solutions to buyer concerns, Not understanding the negotiation process, letting ego get in the way. Working with a certified business broker you can avoid being your own worst enemy. We help set expectations on price and potential structures.
Experience in understanding various business and their financial model- Business broker better understand why a particular company may be more or less profitable than the average company in that industry. Certified business brokers will give more accurate valuations by understanding the financial models and having one’s finger on the pulse of the marketplace. If one does not have the knowledge or competence, then one should not be providing Most probable selling price (MPSP) or Broker opinion of value (BOV) and refer their client for such service to a competent and knowledgeable professional. Some of the factors that determine the value of a business are:
- Size of the business-Bigger companies can sell for higher multiples like investors pay more for shares of a larger company
- Growth-This is the buyer’s reasonable expectation for future growth. It’s determined by the relevant growth history of the business compared to the relevant growth history of the market.
- Leverage-It is the ability of the business to borrow. This reduces the seller’s risk of carrying a note and can increase the value of a business
- Profitability-The continued expectation of higher or lower than average profits, Higher revenues can be caused by lower prices, which leads to lower margins and lower profits so a big business doesn’t always mean a big profit or a big valuation.
- Turnover -It is the ratio of tangible business assets to annual revenue. Assets can just be inventory. The impact of turnover is dependent on weather margins are high or low.
Pricing a business right is a more complex than most owners think. Going too high and the business may never sell. Going too low is leaving money on the table. When it’s time to sell a professional business broker can get the deal done right
Marketing a business for sale is as key step after preparing and valuation. There are many tools required to market a business which the business owner will not have access to. We make attractive business profiles and using latest techniques/popular online listing websites, publication’s, vast industry database and constantly developing contacts with industry buyers and knowing the strategic and synergistic buyers within a given industry, the broker can attract multiple bidders, negotiate higher prices and better terms, and close deals faster.
A business owner has spent considerable time, energy and money in building their business. They deserve a smooth, rewarding and successful exit, but not handling confidentiality appropriately can derail your objective and leave you with a mess to clean up after a deal fails. When representing a client in the sale of their business, confidentiality is vitally important. We may be dealing with one or more buyers, each of whom will have a multitude of questions and requests and his/her own opinion of how to go about the process of acquiring the business. The potential of a breach of confidentiality drastically increases with time, and once the word gets out, there is no turning back hence a qualified business broker/intermediary is essential to sell a business always maintaining the highest level of confidentiality during and after a business sale.
Understanding how deals get done is a very big deal, without this understanding it is highly unlikely a business can be sold for a desirable outcome. There are common deal structures in every industry and in a sale of a business the best business brokers understand commonly accepted deal structure for various industries and prepare the seller better and prevent the buyer from dictating less preferable terms. Business brokers understand due diligence and what needs to be shared, many deals fall through during the due diligence phase as the seller may have not been thought this process before and not prepared for it, we will manage the process making it easier for you.
One of the major advantages of using a business broker is, they can help in securing financing for the buyer without which there is no transaction as many buyers will require some kind of financial assistance in closing a transaction. The process of acquiring a loan can be very confusing for a new buyer who has not navigated the loan process before, business brokers work with many SBA lenders and lending institutions so we have the experience and vast network in providing financial assistance to buyers. In most business sales we pre-qualify the business for sale early in listing process with lenders and list the business a lender approved.
The bottom line is when you are ready to sell your business and thinking if i should use a business broker to sell my business, take the leap of faith and use a certified business broker like us. We will assist you in every step of the way answering questions which may arise during the selling or a buying process. We are a trusted source of information guiding you in the right direction with the consultation of other professions, if required. You will discover that with our assistance you can have a seamless and successful experience in selling or buying a business.