DO YOU NEED A BUSINESS BROKER TO SELL YOUR BUSINESS?
When the time comes for a business owner to retire or move on to a different opportunity, the question arises:
"Do I Need a Business Broker to Sell My Business?"
Or in other words, "Why Do I need a Business Broker to Sell My Business?"
The question of whether to hire a business broker to sell your business is an important one.
You have worked hard to build your business, so the answer to this question is important, and I'm going to give you a straight answer.
Do you need a business broker to sell your business? The answer is "maybe" but let me explain.
Can You Sell Your Business Yourself?
If you have a large network of industry contacts, or have a pool of potential buyers already in place, than you may not need a business broker to sell your business.
Or, if you intend to sell your business to family members, or your employees, you may not need a business broker to sell your business.
Can You Value Your Business Accurately?
If you have a good handle on the local economy, broader economic factors and a strong knowledge of financials, earnings multipliers and cash-flows, than you may be able to determine the value of your business.
Further, if you know what similar businesses to yours have sold for in the last 12 months than you will understand what the market is like for a business of your size, in your industry and in the same micro economy.
With this knowledge of previous sales, and strong financial acumen, you can likely determine the value of your business.
"A business owner can sell their business without a business broker. But there are risks that a business owner needs to be aware of when going it alone."
Do You Know How to Market Your Business for Sale?
Most business owners are good at promoting their business.
After all, you need to be in order to get your first customer, and the hundreds that have come since.
But marketing a business to sell, is different than marketing your business to promote your products or services.
Again, if you have a well-developed network of industry contacts, you may be able to rely on word of mouth to sell your business.
Some of the best businesses are sold this way.
Getting your business for sale in front of the right buyer isn't easy. But if you have the right contacts, you may not need a business broker to do this for you.
Do You Have Access to Buyer Financing?
The majority of business transactions require some level of buyer financing.
Not all buyers come with a pocket full of money with the ability to buy your business, purchase inventory, and inject working capital.
Throughout your business career, you may have developed a good working relationship with your banker or other lender.
If this is the case, you may not need a business brokers contacts with banks, third party lenders and private equity firms to provide the funding that your buyer needs to close the deal.
If you are fortunate enough to be in this situation as a business seller, than you may not need to hire a business broker to help you, or your buyer secure funding for the sale of your business.
So What are the Risks if You Decide Not to Use a Business Broker to Sell Your Business?
So far I have listed the reasons, or circumstances where you may not need a business broker to sell your business.
But like most things in life, there are both pro's and con's.
The biggest upside to not using a business broker is the savings, or perceived savings of the business brokers fees.
Business broker fees are normally in the 10-15% range and are not insignificant if your business is worth six or seven figures.
The downside is, that while saving the business broker fees on the front end, you may lose an amount equivalent to the broker fees or even more if you don't value your business correctly, or fail to negotiate terms that protect your immediate and long term financial interests.
Have You Sold a Business Before?
If you have sold a business before, you likely made a few mistakes, and learned some things the hard way.
The challenge for most business owners is that they have devoted a good part of their life to building their business, but have no experience selling their business.
The question you need to ask yourself is, "Is it worth the risk?"
A skilled business broker will work hard to negotiate a sale price that will off-set the cost of the broker fees.
An experienced business broker like Stonebridge Business Brokers will be savvy enough to have the buyer pay for a portion of the business broker fees.
If You Answered 'Yes'...
If you answered 'yes' to the questions above, you likely don't need a business broker to help you sell your business.
But is you answered, 'no' or 'maybe' to the questions above, we should talk.
Feel Free to reach out to me at:
CHRIS HALL
Senior Business Broker
Stonebridge Business Brokers of BC
PH: 604-866-2236
Helpful article on business brokers in Vancouver.