When 80% of your wealth as a business owner is tied up in your business you need to be able to access it when its time to go, whether that is a sale or a liquidation or selling to employees. As such you need to assess your options and tools and one of those tools is a business broker.
So inevitably you see the comments about them not bing worth the fee or the high failure rate. Now largely not selling is a function of poor records and business readiness as lets face it…you don’t like to pay taxes but look at your neighbors…how many of them have 200, 300, or 500k in cash available to pay cash for a business. Well not many and those that do know to leverage and use banks. Well banks don’t lend if your books don’t stand up; but that is a topic for another day.
So do you hire a business broker and what can they do that you can’t? Like anything there are degrees…a mercedes is not a yugo…both are cars so you better understand and value the delta between one verse the other. I thought I would lay out the 10 things a good broker.
A good broker has:
Expert Guidance and Experience
They have been trained by either their brokerage (make sure its a big one cause the little guy doesn’t have the capital to do training) or the IBBA or BBF or a trade organization. They have done deals….not worked at a company like GE and had a fancy title…done deals, lots of deals, over time…cause guess what activity in the market matters.
Time Savings
You can sell your own business. There I said it. But there is a cost. Namely time and you will hire an attorney…and unless you know to negotiate up front…well there will be fees…and you dont have set non disclosures, set purchase contracts, never mind the experience to get deals to the closing table.
Confidentiality- While Marketing
Maintaining confidentiality is hard and at the same time you need to do it. You need access to the arena where deals trade and parties all are on the same sheet of music regarding what is norms of behavior around confidentiality and process.
Access to Networks
Every day a ACTIVE broker gets emails on listings. Each listing probably gets in the range of 50 to 100 inquiries. The longer its on the market the more contacts. The smart experienced brokers keep those contacts and retarget those prospects. There are also expenses associated with all the listing sites and there are many. A good broker shoulders those fees and if they are bigger they have lower costs associated with those fees which frees capital for more ad spending like social, podcasts, seminars, email blasts, direct mail et al. Go find those dollars in your budget along with the monies to run the business you are running.
Negotiation Expertise
Maybe, maybe you have sold a business one or two times. But 90% of folks have never sold a business in their life. So you need to know what is reasonable. These are not houses, these are not cars. Without experience you do not know and when you do not know you make mistakes
The hard core statistic is that less than 20% of businesses sell…it should give you a moment of pause and cause you to get educated and think and plan.
For more on buying and selling a business in Tampa Bay contact Transworld Business Advisors Michael Shea at 321-287-0349.