A lot of times the owners of a business think about selling their business. It does not matter what the size of the business is, sometimes selling is the best choice. Here is when the concept of a Business Broker comes into the picture.
Many times an ambitious entrepreneur will seek some other business option and sell the existing one to a potential buyer. By hiring business brokers you can ensure that the selling process is done rightly.
A business broker is an intermediary that helps the sellers connect with the buyers. If your business is in Canada then there are plenty of business brokers for you. You just have to know what kind of broker you want and hire him.
Selling your business is a big step that is why you need to know everything about a business broker. In this blog, you will learn about the concept of a business broker and the advantages of hiring one.
Who is a Business Broker?
Before going into technical terms, here is a simple meaning of a business broker. Basically, a business broker is a person or a firm that helps in buying and selling securities and small assets.
You might call them “agents”. These agents undertake the activities and functions on behalf of their clients. These activities include negotiating the prices with the other business. Usually, these business brokers possess expertise in a certain type of business or industry.
These brokers are given commissions on what they sell or buy at profits. In the words of Jeff Baxter, President of MidStreet- “Having a quality broker is invaluable. They have to have knowledge about a tremendous number of things, from creating marketing materials to navigating. The value they add throughout the process of selling a business should far exceed their fee.”
Here are some tasks that a business broker is competent in doing individually or by partnering with a bigger broker firm:
- Business Valuation
- Marketing
- Interviews
- Negotiations
- Due Diligence
- Other critical tasks
What does a Business Broker do?
When a business is transferred to a new owner of a new entity, the tasks related to it can be very complex and challenging. Business brokers do it by maintaining a level of confidentiality.
The major role of the business broker is to become a mediator between the buying party and the selling party. The process of negotiation is an art and it cannot be done by the business owners on their own. They need a certain someone that will help them get to the end of the process and wind it up fast.
Can you imagine how complex is it to transfer the ownership of a huge industry to someone else? It is not even fathomable. Right from getting a fair price, doing the accounts, financial reporting, and closing the sale, there are lots of tasks.
The sales price of the seller cannot be disclosed to the public until and unless the sale is officially done. A business broker successfully maintains the level of confidentiality to hide such details from the public eye and the news.
For a business broker, the fee is based on the selling profit. The higher the profits he makes, the higher will be his commission. If you are in Canada and want to sell your small business then here are some brokers that can help you:
- Business Exits
- Murphy Business
- Wood Bridge International, etc
Benefits of using a Business Broker
By now you know the need for a business broker for selling a business. Be it the buyer or the seller, the broker helps both parties. There are so many advantages to selling a business through a business broker. Here are some of them:
1. Buyer Confidentiality
When a client wants to sell a business, the broker searches for the best buyers. He ensures that the identity of those buyers remains confidential from the public eye. Imagine if the deal Elon Musk made but Twitter got public before the buyout was actually done. Now you know how much confidentiality is important in such business deals.
2. Focus on Business
If the owner of the business starts to look at the basic administrative jobs in the selling process, how will the business be run? A business broker allows the owner to focus on his business and handles the rest of the processes related to selling.
3. Completing the Transactions
If the broker you hire is an expert, then you need not worry about the transactions. He will negotiate a great price and ensure that the sale is complete. Your intermediary will know how to present the business in the best way possible.
4. Maintenance of Documents and Relationships
Another huge advantage of a business broker is that they have connections with the attorneys, lawyers, and all the required parties. These relationships will help you in closing the deal smoothly.
5. Evaluating Right Business Value
When the selling process begins, the most important task is to figure out the business value. A broker has the expertise to do a valuation of all your assets and liabilities. Moreover, if you hire a broker expert in mergers and acquisitions, then the valuation can be done even better.
Final Thoughts
When you have made up your mind to sell the business either to retire or look for a different opportunity, the only task left is to find the right business broker. After that, the broker will look after everything for you. In Canada itself, there are plenty of brokers, some of which are mentioned above.
The task to find the right broker is equally important. It doesn’t matter in which country you live. Check if your broker has the experience he claims, evaluate the relationship of the broker with your team, and lastly, check if he can successfully get you a great deal.
In your opinion, what are the other things a seller or buyer must look for in a broker before hiring him?