Has it come to that time to sell your business? Whether you’re selling to retire, because you need the money, or because you’re in the business of flipping businesses, you’ll need someone with the skills and knowledge to successfully process and sell your business for you. That’s where a business broker comes in.
However, many business owners have become sceptical about brokers over the years because of their high fees and, at times, inconsistent services. We’re here to convince you why this isn’t all brokers and why you should still hire one to help you sell your business.
Table of contents
What does a business broker do?
Business brokers, whether as an individual or company, assist small to medium sized businesses in selling their business. Selling a business requires a lot of administrative work, and often, business owners don’t have the time to get their affairs in order, market their businesses appropriately, and negotiate a sale, let alone all the legal paperwork that needs to be done as well.
This is where a business broker steps in. For roughly 5 to 10% of the value the business sells for, they’ll handle everything involved in the sale, from the valuation and assessment of your business to the negotiations with potential buyers. A business broker’s sole aim would be to assist you in selling your business for the best price possible. Here’s a list of the services they’ll provide you:
- Gather and sort financial information
- Provide an accurate valuation of your business
- Market your business to their network of investors and other areas to find a reputable buyer
- Drawing up a contract and assisting in negotiations
- Doing the due diligence for you
- Handling any other issues that may arise and closing the sale
If you’re on the hunt for a reputable business broker, consider giving Lloyds Brokers in Adelaide a try. They’ll answer any questions you may have and happily help you sell your business.
Why should you hire a business broker?
So, why exactly should you hire a business broker? Surely you can do all of the administrative tasks by yourself? Well, yes, you can do it yourself. However, the workload is only one of the reasons why you hire a business broker to help you sell your business. Here are some others:
For their expertise
When you hire a business broker, you’re not just doing it because they have the manpower to get all of your paperwork done. Assuming you’ve hired a broker with experience in your industry, you’re hiring them for the expertise. Selling a business is a niche in and of itself.
Having someone who knows the current market and what will make a business sale successful is an invaluable investment. By hiring an experienced broker, you’re essentially equipping yourself with someone who knows how to play the game and placing your business in safe hands to be sold.
They have a network of investors
A good business broker will have built up a network of contacts over their years of working in the industry. These contacts are generally investors or other businesses that might have an interest in purchasing your business. By hiring a broker, you’re linking yourself to that pool of individuals who could potentially end up being your buyers. This ensures that your sale turnovers are shorter because they might find you a buyer sooner. This is a good question to ask when you’re looking for a business broker, too.
They can create healthy competition, fetching you a better price for your business
Well-known business brokers who have a reputation for selling profitable business ventures will often attract a lot of attention when they put a business up on the market. This is good because it creates competition. When businesses compete to purchase another business, it can often push the value of your business up, too, fetching you a better price for your sale.
They will help you navigate tax law
When you sell your business, you often trigger capital gains tax, and the way you structure your sale or purchase can often have a positive impact on what profits you walk away with. Good business brokers are well aware of the implications of tax on a purchase or sale of a business and will use this knowledge to create a strategy that mitigates the risk of paying too much tax and will help you have the lowest tax liability possible.
They will save you time
Finally, because business brokers take up the bulk of the work needed to successfully sell your business, they’ll save you loads of time and money in the process. Many small businesses don’t have the manpower to focus on a sale and still run their business at high standards.
With a business broker, you’ll need to sign a few papers, provide your vision for the sale and correct any issues they pick up in the running of your business. Everything else, like the paperwork, the valuation, the marketing, shortlisting potential buyers, writing up the contract, and negotiating the sale will be done by them.
Final Thoughts
Yes, hiring a business broker will cost you a small percentage of your business’s sales, but if you weigh up the benefits of their services, the means justify the ends. Let’s recap some of the benefits. A business broker will offer you their knowledge and expertise regarding the current industry, and you’ll have access to their network of investors, which could possibly mean a faster sale, and you won’t have to worry about the mountain of paperwork. Sounds like a win-win to us.
