When BUYING a business for sale, are there advantages to going through a broker?

February 25, 2010

Entrepreneurs looking for businesses for sale can benefit by working through a broker.

Brokers are not necessary for any sale and they are not only for Sellers.  Some brokers work exclusively with buyers and are paid by buyers, not sellers.

What about the money side of things?   The buyer working through a business broker may spend more money for the business as a seller not paying a commission may have a lesser price tag than otherwise.  The buyer may also find that the business is incorrectly valued, higher or lower, if a broker is not involved.  The buyer working with a buyer’s broker will pay the broker and have the advantage of buying the business at the right value.  The broker can provide perspective on price/value that the buyer does not have or appreciates perspective on.  But, frankly, there are no guarantees on money one way or the other.

Why else would a buyer looking for the right business for sale prefer to work with a broker?  A broker provides the value of an intermediary for difficult negotiations.  The broker has a professional responsibility to disclose critical information (they are aware of) about the business.  The broker can bring forward a number of businesses for sale meeting the requirements of the buyer, reducing the time to find such a business.  The broker can provide proper forms to work through the process of offers and due diligence.  The broker provides perspective on value, operations, fit for the buyer, and opportunity looking forward.

And, as I have said before

Some great purchases are made from the perspective of both sides without brokers.

And,

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.

It is good to note that the person who pays the broker is the person to whom the broker owes their primary duty, though they should be honest and fair to all.  Some brokers represent only buyers and are paid by the buyer.

To learn more about brokers and buyers go to

http://blog.bizquest.com/2009/04/do-you-need-a-buyers-broker-when-buying-a-business.html

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