The Benefits of Working With A Business Broker
By: Greg Dupuis
You've worked hard at your business, spent many years cultivating its growth and now you are thinking about selling. Just like running a successful business takes years of experience to learn, conducting a successful sales process to maximize your value does not "just happen" it is the result of a carefully orchestrated process.
Working with a professional Business Broker can save time, money, and increase the final price received. Some of the benefits of working with a professional Business Broker include:
- Maintain a Confidential Selling Process
- Properly Market the Company
- Market Knowledge
- Provide Overall "Deal Management"
Unlike real estate where you want maximum exposure on a sale, a business transaction requires discretion and confidentiality. If employees were to find out the company is for sale, they may leave; damaging the business for both the current owner and potential purchasers. Anyone considering selling their own business should ask themselves these questions:
How will I handle phone calls and inquires during the day from potential buyers?
Many times, if you don't have time to talk, the potential buyer won't have time to be interested in your business.
Do I know when to release certain types of information?
It is essential to release only the necessary information at the appropriate time. Releasing too little or too much information can damage either the business or the transaction.
How will I handle inquiries from competitors?
Sometimes a competitor is in the best position to make the highest offer for your business but such conversations need to be handled with care.
Properly Market The Company
A good Business Broker starts by reviewing your business with you (operations, financial, sales & marketing, etc.) to help understand its true value. Based on this review, they will develop a comprehensive Information Memorandum to present to prospective purchasers. This document is critical for you to receive full value for your business.
It tells your company's story and it positions it properly to prospective buyers. A Business Broker will know what information to put in (and leave out) of this document. It takes more than just listing a company for sale on an internet site to maximize value and many of the best businesses are never publically advertised at all but rather shown to a select group of potential buyers identified by your broker.
A professional Business Broker offers the experience of completing hundreds of transactions. This is a very specialized profession and what you don't know can hurt you. Although it is true anyone can "sell" a business, it takes an expert to properly manage a successful transaction and help ensure the owner gets maximum value. Think of an appendectomy, a "simple" operation, yet it is still wise to go to a professional! Remember, even for this simple operation, surgeons have years of experience to help them be prepared for the unexpected. You don't want your company to be on the job training for a botched surgery! A good Business Broker is someone who will help you prepare for the unexpected and provide invaluable insight during the selling process.
Selling a business is often a very personal and emotional time for business owners. A broker can offer third party objectivity both in initial pricing and negotiations. Often times a business owner takes a buyers request, either for information or during negotiations, personal and can answer inappropriately, short circuiting a good deal and chasing away a good buyer. Utilizing a Business Broker can help facilitate a positive information exchange and keep a deal on track. A broker can act as a buffer during negotiations and provide an impartial assessment of a situation.
Business Brokers are aware of market conditions affecting the value of a business. They will know if corporate buyers are involved in the space, if credit markets are effecting lending, and can provide insight into the current SBA loan policies environment. A Business Broker will also be knowledgeable about other businesses like yours which may have sold recently and even provide information about proposed tax changes that can effect the value of your business.
Most importantly, a Business Broker will provide you with overall deal management of the selling process; allowing you to focus on running your business during its most crucial time. Many businesses for sale will get over 50 inquiries that need to be screened, evaluated, Confidentiality Agreements executed, and information exchanged. When you decide the time is right to sell your business, a Business Broker will allow you to stay focused on running your business, not the deal. You don't see many race car drivers changing their own tires during a race; I'm sure they could do it but it is just not the way to win.
You have worked hard, you have earned it. When you decide the time is right to sell, consider working with the professionals at Bridge Ventures. We understand how to create value at every step in the process from proper set-up, documentation, presentation, through negotiations and closing. We can help make selling your business the most profitable experience of your life.
About the author: Greg Dupuis is Founder of Bridge Ventures, LLC, a middle market merger and acquisition advisory firm. He has completed over 200 transactions in his career. More information about Mr. Dupuis and his firm can be found at www.bridgeventuresllc.com.