When SELLING a business, why use a broker?

February 23, 2010

Recently someone was about to sign a listing agreement, for the sale of their business.  At the last minute, they elected to try to sell the business themselves.  At this point they had received some of the materials a broker might typically use for the sale of the business, a list of the places any business might be marketed on the internet, and input from the broker as to the general nature of selling the business.

Q:  Why shouldn’t the entrepreneur selling a business try themselves?

A:  They should if they are comfortable with the identifying the value to a potential buyer, the challenges of finding appropriate buyers, know the conflicts that can arise when representing yourself, and understand the potential cost of doing it on their own.

Advantages to the seller working alone are to save money if the costs of selling on their own do not exceed the commission the broker offers.

Disadvantages include:  confidentiality is difficult if you represent your own business;  putting a value on the business does not mean merely opening a book;   the time and unknown costs of finding a buyer and executing the process; not having someone to negotiate on their behalf; not having a buyer roster waiting in the wings to find just the right business; not having a neutral attorney with a fixed fee for the closing documents; not having the time-tested documents leading up to the close that are often provided by the broker; not having systems in place to move the buyer and seller through the process, including the difficult parts.

Obviously a good number of business buyers and sellers find each other and all goes well.  Sometimes, in either scenario the process can go badly.  So, it is both the buyer and seller’s choice, which they are most comfortable with.  A seller might try their own effort and, at some time if a buyer has not been found, it is time to use a broker.  Or perhaps use a broker after the potential buyer has been identified to manage the process.  For the buyer, it may be a better choice to only work through a broker.  See more on this in another blog.

Whether a broker is used or not when selling a business, it is wise to engage an attorney and an accountant on both sides of the transaction, buyer and seller.  A broker can help to reduce professional expenditures but cannot serve as such a professional consultant unless they are professionally licensed.

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One Response to “When SELLING a business, why use a broker?”


  1. One way to look at it is to think of a business broker in the same way a carpenter thinks of a hammer. It is a tool he needs to do his job. In fact an owner should view all of the advisers potentially involved with the sale of his business in that way. For more on selling a business and a free report see http://www.selling-a-business-without-stress.com/freereport.html


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