What You Need to Know About Selling Your Company Through a Business Broker

Are you thinking about selling your company? Is it a good idea to sell your company yourself or get assistance? You're used to figuring things out for yourself and making things happen as a successfulentrepreneur. You have built your business through blood, sweat and tears after seeing it all. The challenge of selling your company on your own might be something you are prepared for.

It's better to leave this work to the professionals than it is to manage it yourself. It's my job to help people sell their businesses, but I'll let you decide. A business broker is a good choice for smaller companies.

Business brokers know how to sell companies. They know what it's like to get a company sold.

There are a lot of reasons to hire a business broker. There are three things that you should think about.

1. Most importantly, advisors have previously sold many companies and may have even sold ones exactly like yours. They know the sales process and how to negotiate the highest price from buyers. They also are aware of the tricks some buyers use to drive down the price. They will know how to avoid falling into these sorts of traps. A typical tactic is for a buyer to get toward the end of the sales process and then announce that your business is not worth what they originally offered. They might try to cut the purchase price substantially because they think you'll be eager to complete the deal.
2. Advisors will know how to value your company and how to best position the opportunity to buyers. This kind of objectivity is hard for entrepreneurs to have. They can have trouble separating their personal identity with that of the business. This is necessary, though. A seller of a business needs an objective view of what they are selling and how much it might be worth.
3. Just as in selling a house, you want an advisor between you and the buyer. They serve as a buffer. You are much better off not dealing directly with the buyer because your emotions need to be in check. If a buyer challenges you about something you might tell them to take their business elsewhere. A good advisor knows how to deflect these challenges to make them less contentious.

The prices of most advisers are reasonable. The majority of their fees are referred to as a "success" fee. They don't make money unless the sale goes well. Their fees can range from 2 percent to 5 percent of the total purchase price, but in many cases the higher the price, the more they make up for the success fee.

Some buyers will waste your time if you don't pay attention. They might want to learn the secrets of your business while pretending to be interested in buying, only to disengage before a sale can occur. You may be competing with these same buyers. Good advisors can tell if a buyer is serious.

If you don't have an advisor, what can go wrong? It's possible that you'll leave money on the table. It could be a lot of money. Many sellers regret not using an advisor.

Some advisers don't spend enough time marketing their business after they sign you up as a client. They may have more work for bigger clients. Their team may be stretched to the limit. If you want to avoid this problem, ask who will work on your deal and what the timelines are. Hold them to their timelines once you hire them.

Being out-negotiated is one of the most common mistakes. If you think selling your company is a good way to learn a new skill, you will have to pay a lot. It could cost you millions of dollars if you're out-negotiated by the buyer.

Here are three tips to help you find the right advisor.

1. Look for an advisor who has completed transactions for companies like yours and in your industry. Such an advisor will already be familiar with the quirks of your industry, as well as the universe of buyers.
2. Hire an advisor you will be comfortable working with. You'll be with them for between six and nine months, which is how long a typical sale will take.
3. Determine whether your company would be a good prospect for international buyers and if so, hire an advisor who has access to those buyers.

Selling a company is a lot of work. Entrepreneurs are more likely to sell their first company to a buyer than to a seller. If you're considering a sale, you'll want to get the best advice you can, and avoid the mistakes that inexperienced sellers make.