The Do’s and Don’t When Working With a Business Broker

The Do’s and Don’ts When Working With a Business Broker

The Do’s and Don’t When Working With a Business Broker

As a business owner, there will come a time when you either pass your business on to your successor or sell it. Some have quite a bit of experience doing this, while others may be doing it for the first time. In either situation, knowing how to deal with a business broker could save you a lot of time and money! 

In this article, we’ll examine the do’s and don’ts of dealing with business brokers and some of the benefits of working with them. 

What is a business broker?

Business brokers usually work alongside businesses when it comes to selling or purchasing a company.

In essence, they mediate the sale or purchase. They’ll help establish a business’s value, market it to potential buyers, facilitate negotiations, and do all the paperwork surrounding the sale.

Why hire one?

The main reason business owners should consider using a broker is because of the expertise and connections.

Business brokers are generally well-versed in the business industry. They know what businesses are selling and how to find the right buyers for them. They also know how to make your business look appealing to potential investors and how to process the sale legally. 

The Benefits

Aside from their expertise, here are some other benefits of hiring a business broker to help sell or purchase a business:

They’ll keep confidentiality

Confidentiality during the sale of a business is invaluable. Rumours and half-truths that disrupt the production line confuse and unsettle employees and customers.

A business broker understands this and will be contractually obligated to keep the business proceedings confidential. 

You’ll save your time 

Selling a business is a time-consuming process. Business brokers will handle most of the time-consuming aspects of the sale, from marketing and screening potential buyers to negotiating terms and finalising the sale.

Help you evaluate your business worth

One of the first steps to selling a business is establishing its worth.

Business brokers will use their knowledge and experience to give your business an accurate evaluation, ensuring that you get what it’s worth and the buyer. 

You’ll have access to a wider network

Brokers, especially those who’ve been in the game for a while, will have a network of potential buyers and other brokers so that they can market your business.

This means that you could possibly get a buyer sooner rather than later. 

Better negotiation skills

It’s common for business owners to reject reasonable offers because the business feels like it’s worth more than it actually is. Brokers are skilled in negotiating for the best price possible, keeping it fair for both parties in the sale. 

They’ll sort out the documentation and legalities

Selling a business comes with a lot of paperwork and legal requirements, some of which can be easy to miss. Having a broker process your sale or purchase is the best way to ensure everything is done by the book. 

The Do’s of Working with a Business Broker

Now that we’ve established how beneficial it is to hire a business broker, let’s go through some “dos” that’ll ensure you find the right one, and that’ll make the whole process a lot easier:

Do your research

First up, do your research. There are a lot of business brokers in Australia. Lloyds brokers in Melbourne are an example of a good brokerage.

Take your time to look for brokers who specialise in an industry similar to yours. Check customer reviews and ask around about their services. Ideally, you want to find a brokerage that has a good reputation amongst Australian businesses. 

Ask questions

Be sure to ask your broker a few questions about their services and how they operate.

Check how many businesses they’ve helped and are currently helping. Also, check their certifications or licenses. This should help you check if they’ll be a right fit for you. 

Communicate clearly with them

From the get-go, establish clear communication with your broker. Discuss everything you need to and let them know your preferred method of communication and when they should let you know about any details in the sale. 

Let them know your budget

Before you officially hire the brokers, be upfront with the about your financial abilities.

This will allow them to reflect on a plan for your business’s sale or purchase and will help them avoid looking for businesses that don’t meet your financial capabilities. 

Make sure your paperwork is up to standard

When important documentation is missing, it can waste your broker’s time. So, before you hire a broker, do your due diligence and check what paperwork they’ll need. This will save them time and speed up your purchase or sale. 

The Don’ts

There are also one or two things that we’d suggest you don’t do when working with a business broker, like:

Don’t rush them

Rushing could cause your broker to make mistakes that can be easily avoided by doing things properly. For this reason, we’d advise against rushing your broker.

They need to do their research, evaluate potential buyers, and ensure the legal requirements are met. 

Don’t downplay red flags

While you assess your business with a broker, don’t shrug off red flags. They may come back to bite you late. Rather, pause and deal with any issues and then progress with the purchase or sale. 

Always get things in writing

Words can flow freely in a sale, but if they’re not on paper, there’s no evidence. That’s why it’s always a good idea to get things in writing.

So, if there are any commitments or special clauses in the sales agreement, be sure to have them written down and signed by both parties to ensure their legitimacy. 

Final Thoughts

Business brokers are there to make your life easier by ensuring your business sales or purchases run smoothly. Don’t overlook their benefits, The could be the difference between getting a quality investor are none at all.

That said, be sure to follow these dos and don’ts when dealing with brokers so your sale is done by the book. 

In this article, we’ll examine the do’s and don’ts of dealing with a business broker and some of the benefits of working with them. 

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