Selling your business can be a tricky process. It’s not just finding the right buyer and signing the deal, you’ve also got to manage the negotiation and handle the administrative tasks that come with the sale process – all while running your business.
If you’re debating whether to use a broker to help you, this article will help you weigh all of your options before making a decision.
What is a business broker?
A business broker is a professional who specialises in helping business owners assess the value of their business and then manage the sale of the business on behalf of you the business owner.
Business broking is regulated in Australia and business brokers are required to have a business broking licence. The specific licences vary from state to state. The Australian Institute of Business Brokers (AIBB) is the peak industry body for business brokers in Australia. We recommend you work with a broker who is a member of AIBB.
Pros of Using a Business Broker to Sell Your Business
Selling your business can be a complex and time-consuming process. A professional business broker will take on the majority of the work to sell your business. This means that you can continue to focus on running your business.
Don’t underestimate this. It’s critical that you continue to run your business while it’s for sale. Falling revenue or profits is a major red flag for buyers.
By hiring a business broker, you can maintain better work life balance as they will reduce the burden of tasks such as marketing the business, vetting potential buyers, negotiating offers and coordinating with the solicitors, accountants and banks who will all be required to ensure a smooth transition.
A good broker will also introduce your business to an extensive network of buyers who have signed the confidentiality deed saving you from answering the same questions over and over again from every buyer.
Business brokers will also help you prepare all the documents that a buyer will need to understand your business before starting to advertise your business so that when a buyer enquires you can respond quickly and keep the deal moving.
Business brokers are experienced professionals who have helped numerous business owners sell their businesses.
Therefore, they understand the market and the processes involved in a successful sale and can leverage their experience and expertise to find the right buyer for your business.
Business brokers know the current trends and expectations of buyers and can guide you through the process of selling your business.
Negotiation and Valuation Expertise
One of the biggest challenges in selling your business is determining its value. Whilst most business brokers are not Registered Business Valuers they will help you to determine the value of your business based on its financial performance, industry trends, and market conditions.
Business brokers will also help you determine how to price your business to attract a vast network of, as well as the right type of, buyers and ensure you sell your business for the best price.
Setting a fair price will help to attract serious buyers who are willing and able to buy your business, instead of just tyre kickers.
Business brokers are professional negotiators and can often negotiate better prices and terms from buyers. They can ensure that both parties involved get a good deal.
Maintaining confidentiality when selling your business is critical to avoid business disruption to your business and protect your reputation.
Business brokers can help maintain the confidentiality of your business by writing an advert that attracts buyers but doesn’t give away your business’s identity. Your business broker will also screen potential buyers before disclosing your business identity.
This ensures that sensitive information about your business is only shared with individuals who have a genuine interest in buying your business and the means to do so.
Cons of Using a Business Broker to Sell Your Business
When you’re thinking about hiring a business broker to help you sell your business, it’s important to consider the potential drawbacks as well.
If you’re considering using a professional business broker to sell your business, naturally there are costs involved.
Business brokers typically charge a fixed marketing fee as well as a commission (as a percentage of your business sale price) when your business is sold. These fees can add up to a substantial amount and have a considerable impact on your final payout.
You’ll need to consider if the costs associated with hiring a broker for selling your business outweigh the benefits listed above.
As with any professional, there can be large variations in the costs between brokers.
Loss of Control
Another potential downside of working with a business broker when selling your business is that you will have less control over the sale of your business. For many long-term business owners who are used to being an owner-operator responsible for their businesses, this loss of control can be quite frustrating.
Whilst as the business owner you will retain the final sign-off on the contract of sale when you hire a business broker there may be decisions made without your input.
To ensure that your vision for the future of the business is properly taken into account, it is important to clearly communicate your goals and expectations to your business broker upfront.
Lack of Personal Connection
Selling your business is always a personal and emotional decision.
Working with a business broker means that you may not have a personal connection with potential buyers. This can make the process feel less personal and less meaningful. As the owner of your business, you may want to ensure that the person who buys your business shares your vision and values.
When you work with a business broker to sell your business, there is a potential for a conflict of interest.
A business broker is working to sell your business and earn a commission and may prioritise their own interests over yours.
Having said that, most professional business brokers put their client’s interests ahead of their own, working for months or years with the risk that if your business doesn’t sell they won’t be paid.
In order to minimise the potential for conflict of interest you should ask for a referral from your accountant or solicitor to a specific individual, not just a firm.
Look for a broker who has ties in the local community and who is willing to put their personal reputation on the line.
Selling your business can be tough, but so are you.
We’re here for you, whether you decide to sell your business yourself and just want some professional guidance to keep you on the right track, or one of our trusted professionals to take the reins – you can count on BusinessSales.com.au to keep you and your business moving.
Thinking about selling your business?
Let’s face it selling your business can be tough.
Anything worthwhile is!
BusinessSales.com.au was purpose-built to give hardworking business owners the opportunity to pass the baton on to a new owner without all the smoke and mirrors.
Are you wondering, “How do I sell my business?” If you don’t know where to start or how to move forward with the sales process – we’re here to help.
We can help you work out who and how to best sell your business whether that be selling your own business yourself or hiring a professional business broker.