Selling a business - by yourself or through a broker?
When you do decide to sell your business you have to also decide how you are going to sell it; whether by yourself, through a business transfer agent, or through a business broker.
Typically selling a business yourself is demanding. Preparing all the necessary documents and advertising material, devising and effectively executing a successful marketing strategy, maintaining the confidentiality of the sale, approaching potential buyers and acquirers, negotiating an effective deal and working through the legal process can be time consuming, frustrating and highly demanding. All this whilst trying to continue to successfully operate your business.
Most Business Owners opt to seek specialist help. Choosing the right advisor is imperative not only to the success of the transaction, but it allows you to continue to operate your business, maintain its value and offer you peace of mind.
A business transfer agent will work similarly to an estate agent and offer you a more systematic approach. They will typically use internet advertising to sell your business and list a larger number of businesses and are therefore more suited to smaller independent businesses. You will have to attend all viewings yourself, and they act, in the main, as an introductory service. They tend to charge up front fees for marketing and a success fee.
A business broker, or mergers and acquisitions agent offers a more specialist service. They have been through the whole sales process many times with several clients and the advisor you elect will be responsible for taking you through the whole transaction. They will have more experience at each stage of the process and offer a more consultative approach. They will work with you to get your business ready for a sale, prepare detailed documents, provide guidance as to a realistic and accurate valuation, attend meetings with you, carefully guiding you through the process and help you make the right choices at each juncture. They will also offer you objectivity during the crucial negotiating stage. They will have the ability to approach corporate buyers, investors from the UK and abroad and potential acquirers from within your industry and complimentary industries. Perhaps most importantly, they will maintain your confidentiality. Brokers tend to make a deal happen as more often than not, that’s when they are paid, normally between 3-5% of the sale price. In some cases, they may charge a small retainer.
If your sale is simple and straight forward, and confidentiality is not important, you may elect to sell your business yourself or use a business transfer agent.
If, however you are looking for a more specialist approach and your business has a strong value, then you may save time, stress and money by using a broker. It allows you to keep running your business and maintaining its value; after all it may take a year or two to find a suitable deal.
Would you like to discuss the sale of your business?
Book your free consultation with the author of this post Zach Dogar.