3 Reasons to Hire a Business Broker to Sell Your Business
Selling your business is likely one of the most important decisions in your life.
Selling your business is also one of the largest financial events of your life. Your business likely represents a significant amount of your career, and symbolizes a considerable amount of hard work, sacrifice, and financial investment and risk spread across years or even decades.
When the times comes to sell your business, you want to do it right.
In this article, we will present three reasons to secure the services of an experienced business broker when it comes time to sell your business in BC.
Reason #1: Business Valuations
Obtaining an accurate business valuation when you sell your business is of paramount importance.
An experienced business broker, like Stonebridge Business Brokers of BC will be able to accurately value your business. This is important for many reasons.
First, an accurate business valuation is important for the seller. As the seller, you need to know what your business is worth in todays market so that you can confirm that the sale price of your business will meet your financial needs moving forward.
If you are selling your business because you are retiring, then you need to know that the proceeds from your business will be enough to generate the retirement income that you need. This is where a business broker can assist you not only in valuing your business, but also helping you map out your financial needs to fund your retirement and how the sale of your business can act as a retirement vehicle.
Second, a business valuation is important in terms of listing your business for sale in the marketplace.
Businesses that are overvalued when they hit the market, will likely not sell. And if you have ever tried to sell a house that has been overpriced, you know that not only will the house not sell, but the listing will become tainted for future attempts to sell the property.
In a case where the business has been overvalued by a seller or listing business broker, the seller will lose credibility with the market and with the buyer. In addition, the seller will lose any leverage in the negotiating process as the potential buyer will know that the business is over valued and that the business will likely sit on the market for some length of time.
On the other side, if the business is valued too low, it will cost the seller money.
An undervalued business will likely sell very quickly and it will be difficult for the listing business broker to have time to generate competitive offers. While a quick sale is often in the best interest of the seller, and undervalued business leaves money on the table and causes the seller of a business to miss the only chance to maximize the sale price of the business.
In some cases, an undervalued business will even scare a potential buyer away.
In this instance, a potential buyer may be concerned that there is some unknown reason that is lurking behind the scenes that is causing the business to be listed under market value.
When a buyer becomes fearful that they are buying a problem, even if a problem doesn't exist, it can be quite difficult to regain the buyers confidence in the business and the sale of the business is rarely completed.
Reason #2: Managing Emotions and Expectations
We are all human, and even though the sale of a business is a 'business transaction' it can be hard to keep emotions out of the transaction process. This can be true for both the buyer and the seller.
For the seller, emotions enter in when one reflects on the time, energy, money, risks, sacrifices and other factors that have went in to building the business.
Often, a business owner will place a higher value on the business because of the hard work that has gone into the business and there is a considerable emotional attachment to the business.
The seller will often have high expectations on what the business is worth and the length of time that it will take to sell the business.
For the buyer, emotions get involved when the buyer considers what they consider spending a considerable amount of money to buy a business.
Money rarely grows on trees, and for most buyers, purchasing a business represents spending hard earned money that has been saved for years. Like the seller of a business, the buyer looks at things through a prism of the hard work, time, energy and sacrifice that it has taken to acquire the financial resources needed to buy a business.
Neither party is wrong.
Both the seller's and the buyer's position have merit. However, when emotions get involved in a business transaction, it can be very hard to close a deal.
An experienced and trained business broker will have the soft skills needed to guide the buyer and the seller through these naturally occurring emotions so that clarity can be found.
A good business broker will help each party see the transaction through the other parties eyes and help both sides understand what the other is feeling. When a business broker does a good job helping the parties manage emotions and expectations, there is usually enough common ground to complete the sale of the business.
Reason #3: Negotiating and Closing
Selling a business isn't a science.
There is no fool proof way to sell a business, or to buy a business. There are many factors at play that can derail the sale of a business.
A qualified business broker will be a skilled negotiator.
There are countless ways to structure a deal to overcome obstacles during the negotiation process. And a skilled business broker will know creative ways to structure the business transaction that will appeal to both the seller and to the buyer.
Selling your business on your own is certainly an option. But as most business owners only sell one business in their lifetime, selling a business on your own can be difficult when you get to the negotiating, due diligence and closing process.
A business broker will be able to identify potential 'deal breakers' before they happen, and will be in a position to keep you from common negotiating pitfalls that can derail the sale of a business.
Do You Need to Hire a Business Broker to Sell Your Business?
The short answer is, 'no."
As a business owner, you can choose to sell your business on your own.
Doing so will help you save the fees that a business broker will charge to help you sell your business.
That is the advantage.....but it may also be a disadvantage.
At Stonebridge Business Brokers of BC our strategy is to get you an amount for your business that is over and above what our fees will be to sell your business.
In this way, you get the benefit of using our services to enjoy a stress free and seamless business sale transaction that maximizes the sale price of your business and eliminates the risk of selling your business on your own.
Before you list your business for sale in BC. Contact Stonebridge Business Brokers of BC and get the information and advice you need to help guide your decision to sell your business in Vancouver, or list your business for sale in BC.
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