More than ever, business owners are realizing the need for increased efficiency and responsiveness to change, and whether you are buying or selling a business, bringing in the right kind of help can make all the difference. But what will a business broker help do that you can’t do for yourself? This is a worthwhile question, and the answer may surprise you.
What is a business broker?
By definition, a business broker is a professional who assists with buying and selling businesses. This assistance includes many areas of the buying and selling process that owners are either unaware of or may not have considered before, so it can be helpful to understand more specifically what business brokers do with and for their clients.
What will a business broker help do?
Provide Certified Business Valuation
Given the financial complexity involved (and benefit of objectivity), it is nearly impossible for a business owner to accurately determine the value of their business on their own. A business valuation is a critical piece of financial information to possess even if selling is not imminent. Obtaining an accurate, professional business valuation provides a business owner critical information about the status of the business, and with the experienced insight of a business broker, can include feedback regarding actionable opportunities for increasing the business’s value.
Another key financial factor in selling a business is verifying that your company meets current lending guidelines prior to going to market. Employing a professional helps ensure that your business valuation is of the quality that can hold up to the lender’s pre-screen and review of the business, which will further increase the likelihood of a successful outcome.
Protect Confidentiality
Confidentiality is one of the most important ways business brokers can help an owner through the selling process. There are multiple reasons confidentiality is absolutely critical when selling a business, including shielding sensitive information from competitors, maintaining stability with customers, and protecting employees.
For a business owner to maintain confidentiality while attempting to effectively market his or her own business is nearly impossible. Within the protection of a confidentiality agreement, business brokers will market the business, field inquiries, and reach out to prospects without revealing your name or the name of your business.
Attract (and Negotiate) Multiple Offers
At Viking M&A, we have our own network of thousands of prospective buyers. With access to this kind of existing network, business brokers can help increase the likelihood of attracting multiple offers as they also reach other interested buyers by marketing your business through newsletters, strategic direct mail pieces, the internet, and more. (And remember, all of this takes place while taking the necessary steps to maintain confidentiality.)
As a seller, receiving multiple offers can give you negotiating leverage that you would not otherwise have — that is, if those multiple offers are handled wisely, which is something else a business broker will help do. So, while having multiple offers equates to a more complex negotiation process, with the guidance of a business broker, it also increases the likelihood of your sale reaching the desired outcome.
Vet Interested Buyers (or Sellers)
As mentioned above, business brokers reach interested buyers through strategic marketing and a large network of prospective buyers. Once inquiries begin arriving in response to those marketing efforts, a business broker will help save you time and energy by pre-screening buyers to ensure they are not only serious but also financially capable of purchasing your business.
At this point in the process, having a business broker continues to protect your confidentiality. Viking’s business brokers insist prospective buyers sign Non-Disclosure (NDA) or confidentiality agreements, then meet with them face-to-face (if local) to educate them on the buying process. Our business brokers also present prospective buyers to you for your approval before we release any sensitive information to them, such as your business’s name.
Provide Buffer Between Buyer and Seller
A primary role of business brokers is to provide separation between you (the seller) and the buyer. When a serious prospective buyer is identified, this buffer proves incredibly helpful, keeping discussions objective, candid, and productive.
Even more importantly, this separation allows you to keep running the business. It is unreasonable to expect an owner to manage the demands of a business sale without that time and energy being taken away from the business or their family (or, more likely, both). Professional representation makes all the difference in how the sales process impacts everyone involved.
Manage Due Diligence
The objective of the due diligence period, the time between accepting an offer and closing the sale, is to confirm that your business was accurately represented to the buyer prior to the issuance of their offer. The length and level of detail involved can vary greatly and is primarily dictated by the buyer. Navigating and responding to multiple requests for information can be quite time consuming, so having a business broker to hand this off to can prove invaluable.
Another critical benefit of having a broker is that, while most deals that get to due diligence proceed through to closing, we also realize that your business is not sold until the sale has officially closed. So, even as the prospective buyer performs their due diligence, our business brokers continue to collect new inquiries in order to keep the sales pipeline open.
Provide Objective Guidance
If you are thinking of selling your business, having accurate information to make that decision is key, which is a high priority for us at Viking. Our business brokers will help you become as educated as possible on the selling process. Our priority is to educate a business owner so they can make the best decision, whether that means an exit is still in the distant future or if a sale could be right around the corner.
Additionally, as a business owner, sometimes you simply need honest, objective feedback from someone who “knows the ropes.” With over twenty-five years of buying and selling businesses (and a team of many business brokers who have owned their own businesses), Viking is proud to offer that kind of experienced, seasoned guidance to our clients.
Should I use a business broker?
Your business is likely your most valuable asset, and as such, it is wise to seek the help and guidance of a trusted business broker. Let’s discuss how our business brokers and advisors can help you identify the best next steps for your business; contact us for a complimentary consultation today.