FAQs About Business Brokers
- Why shouldn’t I just try to sell the business myself?
- What are the benefits of using a business broker?
- How should I choose a business broker?
- Are real estate brokers also business brokers? Can they sell businesses?
- Wouldn’t I be better off selling my business through a multi-listing service?
- Why should I use Biz Owner Advisors to sell my business?
- Who would be my contact person at Biz Owner Advisors?
- Will my attorney or CPA be involved in the sale process?
Why shouldn’t I just try to sell the business myself?
Because it’s a terrible idea! Most FSBO (for sale by owner) businesses are way over-priced and never sell. Under a FSBO scenario, there is significant risk of a confidentiality breach which might ruin the business. Most buyer inquiries are from tire-kickers and it requires experience to filter through them. Selling a business is so time-consuming that, under a FSBO approach, the value of the business may begin to decline. Negotiations can be explosive and emotional and are best handled by experienced intermediaries. This is only a partial list of reasons owners shouldn’t try to sell the business themselves.
Because it is one of the major obstacles to a successful business sale, The How to Plan and Sell a Business website has an article devoted to the topic: Owners Who Try to Sell the Business Themselves. If you are considering trying to execute a FSBO, it’s imperative to read the article.
What are the benefits of using a business broker?
Knowing how to maintain confidentiality tops the list. Others include: experience in handling the complexity of business sale transactions; maximizing sale proceeds; streamlining the sales process to minimize business interference; getting past the inevitable emotional issues that arise and helping to minimize (but not eliminate) other advisors’ fees.
This article: Benefits of Using a Business Broker, from the How to Plan and Sell a Business website, provides a list of 27 advantages of utilizing business brokers, categorized by the various stages of a business sale transaction.
How should I choose a business broker?
That’s a great question. It is absolutely one of the most important decisions you will make in your life, and it has profound implications. Does that seem like a bit of an overstatement? It’s not.
However, there are far too many considerations to answer in a paragraph or two. The How To Plan and Sell a Business website has a lot of content addressing this subject and we encourage you to read them all:
Special Report: Insider Secrets to Selling Your Business – Business Broker Best Practices and Selection Criteria is a 12-page document providing insight into the world of business brokerage and provides great information on business broker selection criteria.
Choosing a Business Broker/Intermediary is an article summarizing much of the selection criteria included in the Special Report.
10 Considerations for Choosing an Intermediary explains how to interview business brokers before making a decision.
Choosing the Wrong Intermediary explains how hiring the wrong person to represent your business might create a major obstacle to a successful sale.
Are real estate brokers also business brokers? Can they sell businesses?
Most real estate brokers are not business brokers, but some are. The representation and sale of a business versus real estate requires totally different approaches to the sale process. For example, in most instances, maintaining confidentiality is of utmost importance in business sales, but is not a consideration at all for real estate sales. Simply stated, if you have a business that you feel is valuable, do not even consider engaging someone who spends most of their time on real estate transactions. If you’ve read the Special Report and articles referred to in the previous question, you’ll know why. If you haven’t, we urge you to read them.
Some business brokers maintain real estate brokerage licenses only for the purpose of selling real estate in conjunction with the sale of a business. Jim Stauder is a licensed real estate broker in Missouri and Illinois, but only utilizes those licenses when a business owner wants to sell or lease the facility that houses the business Jim is selling.
Wouldn’t I be better off selling my business through a multi-listing service?
Confidentiality is a very important consideration. Selling a business is not like selling a house. Forget the notion of selling through a multi-listing service. It’s a horrible idea.
Why should I use Biz Owner Advisors to sell my business?
On our home page, there are three columns of explanation to answer this very question. To summarize: 1) we provide no charge, no obligation evaluations to provide a broker’s opinion of value; 2) we identify the obstacles you face to a successful sale; 3) we identify opportunities to increase the value of the business; 4) experience counts and you will work directly with the principal of Biz Owner Advisors, LLC; 5) Jim Stauder, CPA ( inactive) has more than ten years of business brokerage experience and will provide you with straight talk regarding the strengths and weaknesses of your business. He knows how to sell you’re your business at its maximum value while minimizing your need to provide seller financing.
Who would be my contact person at Biz Owner Advisors?
Jim Stauder, CPA (inactive). Jim has more than ten years of experience in business brokerage and is the Founder and Author of the How to Plan and Sell a Business website.
At larger firms, you may never see the principal of the firm and your account may be assigned to the first business broker who initiated contact. That could result in working with someone with inadequate experience to get the job done. When selling your business, you don’t want someone who is learning on the job representing your business.
Will my attorney or CPA be involved in the business sale process?
We would recommend that you discuss the sale of your business with a qualified tax expert to determine the tax implications of a sale. Although we can provide general information regarding tax implications, the tax regulations regarding business sales are very complex.
Depending on the condition of your accounting records and your understanding of those records, your accountant or CPA may need to have some involvement after an offer is received and the buyer is conducting due diligence.
To facilitate the business sale negotiation process, our attorney (the broker’s attorney, who represents Biz Owner Advisors, LLC, but does not represent the seller) has developed a standardized Offer to Purchase form with standard financing and due diligence contingencies to document the agreement between the seller and the buyer. The broker’s attorney has also developed a standardized, neutral (fair to both the buyer and seller) Asset Purchase Agreement (APA) and will translate the Offer to Purchase terms into the APA. The draft of the APA will be provided to the attorneys representing both parties. It is not uncommon for attorneys to recommend changes to bolster their client’s legal position. Since there are numerous and complex legal implications within the APA, we recommend utilizing an attorney experienced in business sale transactions to review the final documents used to transfer ownership of the business.
Negotiations regarding final language in the definitive documents can be delicate. It is incumbent on both parties (seller and buyer) to inform their respective attorneys that they want adequate protection, but they also want to get the deal done. Many transaction failures can be traced to the unreasonable expectations of an attorney representing one party or the other.
If you have a question, send an email to firstname.lastname@example.org.