The Value of Using a Professional Business Broker - NEO Business Advisors
The Value of Using a Professional Business Broker

Using a professional business broker when selling a small business offers many advantages to the business owner. Many business owners think selling their business is akin to selling a home. I often encounter business owners who feel they can sell their business themselves and save the cost of a commission and relate the process to selling a home. There are several major differences between selling a home and selling a business.

1. A business transaction often involves the ongoing business operations, multiple assets of the business including furniture, fixtures, equipment and inventory, and possibly real property or real estate whereas the sale of a home is a single real property asset.

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2. Confidentiality must be a priority when selling a business to maintain the value of the business whereas the sale of a home is marketed publicly with detailed information about the property, it’s location, and photos of the home.

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3. Time is a limited resource. The business owner must focus their time and energy on continuing to run the business to ensure sales, profit and in turn the business value remain strong throughout the business for sale process. A business broker will focus their time and energy on marketing the business, qualifying buyers and facilitating negotiations and due diligence.

4. Use of a business broker will often result in a higher price and better terms being negotiated for the seller beginning with the business valuation and continuing through the negotiation process. While a seller pays a business brokerage fee for the business intermediary services, the fees are well earned throughout the process allowing the business owner to focus on running their business while the business broker facilitates a smooth transaction and often drives a higher selling price.

Below is a list of 16 key steps in the business brokerage process where a business broker offers professional expertise and added value.

1. Determination of a Market Value for the business.

2. Writing the public business listing and the Confidential Business Review (CBR) or offering memorandum.

3. Marketing the business listing to potential buyers.

4. Qualifying potential buyers both financially and based on professional experience and business fit.

5. Get Qualified Buyers under Confidentiality via confidentiality and non-disclosure agreements.

6. Full disclosure of the Confidential Business Review and supporting information to Qualified Buyers.

7. Tour with the Qualified Buyer, the Business Broker, and you, the Business Owner.

8. Financial Review of the business financials with Qualified Buyers.

9. Generating offers from Qualified Buyers.

10. Negotiating the price and terms of an Offer.

11. Offer acceptance.

12. Facilitating due diligence – getting updated business and financial information for the potential buyer.

13. Facilitating due diligence – making sure all contingencies of the offer are met and removed.

14. Facilitating due diligence – making sure all financing is in place.

15. Other due diligence making – lease or real estate transfers

16. Closing and Dispersal of Funds

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While there are many benefits to working with a professional business broker when the time comes to sell your business, these 16 steps of the business brokerage process are key.

Contact Nick Fares at NEO Business Advisors to learn more about how a business broker can help you maximize your value when selling your small business and/or guide you through the process of buying a small business.

Nick Fares
NEO Business Advisors