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Do I Need a Business Broker to Sell My Business? Are They Just Evil?

Brian A. Lincer

by Brian A. Lincer
Business Attorney and Intellectual Property Lawyer in New York and New Jersey

Date: 01/10/2014 | Category: Business Transactions | No comments

The short answer is absolutely (to the first question and maybe to the second).  The only situation where the services of a business broker or an investment banker would not be necessary is when you are either selling or transferring your business to a current employee‚ a family member or a buyer who you otherwise already know.  If you do not fall into one of these categories‚ you need the services of an investment banker or business broker as they have many important irreplaceable functions‚ such as:

Finding the Right Purchase Price

The business broker will have substantial input on the list price of your business.  An experienced business broker will have the insight and information on how much he believes that you can sell your business for.  If you list your business at too low of a price‚ you are going to fail to maximize your profits on the sale.  Listing your business at too high of a price will limit your ability to sell the business.

Marketing Your Business

The business broker will be responsible for properly marketing your business to potential buyers and finding suitable candidates for the acquisition.  It is important to understand that there may be a few potential buyers for your business and choosing the right one is critical to a smooth closing.  Choosing the wrong buyer can lead to delays or‚ even worse‚ can lead to post closing situations where you are involved in a litigated dispute. 

Structuring Deal Terms

The business broker will be the person responsible for structuring the business terms of the deal.  The business broker will structure the purchase price‚ the amount of seller financing‚ if any‚ any contingencies in place‚ the post closing obligations of the buyer and seller‚ etc. 

Knowing What Business Buyers Want

The business broker or investment banker has sold other businesses similar to yours and they have represented others that stand in your shoes.  They know what information and key points buyers are interested in and what is irrelevant in the minds of most business buyers.  Many business owners cannot gauge this because they have not dealt with potential business buyers before.

Getting You Ready for Due Diligence

When selling your business‚ you will have to be prepared for the buyer’s due diligence review of your business.  The buyer will want to review your business records at some point during the business purchase process.  Preparing for this can be a daunting task and knowing what documents to prepare and create is essential for getting past this process and closing the deal.

Looking to save on the broker commission will only end up hurting you in the end.  For more information on utilizing the services of business brokers and other important information about selling your business‚ you can request a complimentary copy of ENDWISE: the guide to selling your business with peace of mind.

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