Should I Use A Broker To Sell My Business?

by Feb 9, 2023

Selling a business is one of the most important decisions an entrepreneur can make. It requires careful planning, accurate valuation and strategic marketing to ensure that your business receives fair market value. And most business owners always seem to ask, “Should I use a broker to sell my business?”

using a broker to sell my business

Before you think about selling your business, you should research, and understand these important factors and definitions:

  • Business Brokers – A professional who assists in facilitating and managing the sale of a business by helping set appropriate expectations about value and completing all required paperwork related to closing deals
  • Business Sale Plan – A document outlining how owners plan to market, negotiate and close deals on their businesses
  • Business Valuations – The process used by professionals such as accountants and appraisers evaluate what buyers should pay for certain businesses given current market conditions
  • Document Preparation – Legally binding written contracts must be prepared prior to finalizing any transactions between buyer/seller parties
  • Negotiation Process – Both parties involved in selling/buying will often engage in negotiations regarding pricing structures before entering into legally binding agreements

So should you do it alone or use a broker? If you choose to go it alone, you’ll have full control over the process but will lack professional guidance. If you hire a broker, they bring expertise to the table but there are costs involved. Here’s what you need to know about whether or not to enlist the help of a broker when selling your business.

The decision on how best to sell your company shouldn’t be taken lightly – it could mean the difference between receiving top dollar for your hard work or leaving money on the table.

To maximize value, many entrepreneurs consider using brokers who specialize in helping businesses transition from one owner to another. With their experience and knowledge of current trends and industry dynamics, these professionals may provide invaluable insight into getting top dollar for your venture.

However, hiring a broker isn’t without its downsides. Fees often cut into profits and relinquishing some degree of control over negotiations can be difficult for those accustomed to making all the big calls themselves.

Who Are Business Brokers?

Ah, yes, the world of business brokers. These mysterious figures who claim to know the secrets to selling a small business with ease.

How do they manage it?

Are their powers real or merely an illusion?

If you’ve ever wondered about this peculiar breed of professionals, then pull up a chair and let us tell you all about them!

Business brokers are experts in the field of business sales. They have a thorough understanding of the process involved in buying and selling businesses and can provide invaluable advice on how to maximize your sale while minimizing hassle.

Professional business brokers will help develop relationships between buyers and sellers by providing unbiased information that both parties can use to make the best deal possible.

They also understand the nuances of state laws as well as other important considerations like tax implications, industry trends, and financing options that could affect a successful outcome.

The business brokerage industry is full of highly skilled individuals whose knowledge makes them incredibly valuable when attempting to sell a small business for top dollar.

As such, engaging an experienced broker can be one of the most effective ways to ensure that you get maximum profit from your venture.

With their professional insight into current market conditions, assistance with negotiations and facilitations, access to resources like investors or lenders—business brokers offer immense value for those looking for success in their transaction.

Why Use A Business Broker To Sell A Small Business?

According to, 70% of all small businesses never sell because of the excessive asking price or poor deal structure.

Business brokers have expertise in the business sale process and can provide guidance throughout every step of the transaction. They also possess knowledge about market conditions, pricing strategies and how to protect confidential information during negotiations.

Utilizing brokers allows owners to continue running their business while they search for potential buyers without having to handle all the paperwork associated with selling a business themselves.

It’s helpful to note that prospective buyers often feel more comfortable if there is a competent broker involved in the sale as they will be expected to organize financial records and conduct due diligence on the seller’s behalf.

There are many benefits that come from using a business broker:

  • They know how much your business is worth and what price range you should expect when listing your business for sale
  • They understand which markets work best for certain types of businesses
  • They have relationships with attorneys and lenders who can help facilitate different stages of transactions
  • They can navigate complex legal processes involved with selling or buying a business

Using business brokers ensures that everything runs smoothly throughout the entire process and alleviates some of the stress associated with transitioning ownership.

Why You Might Not Want To Use A Business Broker

While brokers may have their advantages, there are instances where it might not be in your best interest to enlist one for assistance.

Figuratively speaking, if you’re looking for someone to help you through the process of selling a business, engaging a broker is like signing up for a guided journey with no clear destination.

For starters, enlisting a broker means that you’ll need to hand over control of much of the sale process–from preparing documents and determining valuations to negotiating the ultimate transaction price.

You’ll also likely be subject to fees associated with having them manage the entire sales cycle which could cut into any potential profits from the sale.

Because they tend to work on commission, some brokers may prioritize making money rather than optimizing returns on behalf of their clients.

While engaging a reliable broker has its advantages in terms of assisting with tasks related to preparing documents and valuation estimates during the sales process, make sure you consider other factors such as cost implications before deciding whether one is right for your situation or not.

Finding A Reliable Broker

If you’re considering selling your business, hiring a reliable broker can help ensure the process goes smoothly and you get a fair price for it.

For those looking to find an experienced broker with access to qualified buyers, there are several things to keep in mind.

When selecting a broker, look for someone who is familiar with non disclosure agreements as well as purchase agreements.

They should also have experience negotiating successful sales and understand how to assess the value of businesses like yours so that they can help determine a realistic purchase price.

You want to consider whether the broker has knowledge about financing options available to potential buyers that could make them more likely to close on the sale quickly and at a fair price.

An experienced broker should be proactive in marketing your business both locally and nationally while making sure all interested parties sign confidentiality agreements before viewing sensitive information such as financials or customer lists.

It’s important to remember that this process takes time but if done correctly will result in finding the right buyer at the best possible terms. By taking these steps, you’ll be able to move forward confidently knowing you’ve found someone who can handle every aspect of selling your business efficiently and effectively.

What To Know About Working With Business Brokers

Having someone who is familiar with the industry standards and knows what other businesses are worth will help make sure that you get the right price for yours. Business brokers understand what value needs to be included in order for potential buyers to want your business.

They also know how best to market the sale so that it reaches its maximum potential when sold. Furthermore, they’ll use their contacts within the industry to connect you with prospective buyers quickly and efficiently.

Business brokers work hard so that you don’t have to, allowing you more time to focus on other aspects of running or understanding your current business better.

Their experience allows them to assess all necessary information about your company accurately and create strategies accordingly, giving you the opportunity of gaining most out of the sale without putting extra effort yourself.

But the main thing is that you’ll have peace of mind knowing that an experienced professional is taking care of everything while ensuring excellent returns on investment.

How You Can Help Business Brokers Maximize The Sale Of Your Business

It almost sounds too good to be true that such a complex process can be handled by someone outside of yourself – but that’s what experienced brokers do every day.

If done right, proper preparation along with professional guidance will surely lead towards a successful outcome for both seller and buyer alike.

With their help, securing a profitable sale becomes much easier – provided that all necessary steps are taken beforehand.

  • Find an experienced business brokerage in the market for businesses for sale. They will understand what buyers want in their deals.
  • Receive data backed estimates on how much your business is worth before putting it up for sale. This way you know exactly how much you should expect from any offer.
  • Set realistic expectations about negotiations and don’t accept anything less than what you believe your company is worth. A good broker knows this and won’t let you settle for too little money if they can avoid it.
  • Be prepared with all required records & important information before selling your business or potential buyers may walk away due to lack of trust in the deal’s security.
  • Get tips from other people who have gone through similar processes, as well as advice from industry professionals like lawyers and accountants, to ensure everything goes smoothly during negotiations.

Required Records & Important Information Before Selling Your Business

When selling your business, you’ll need to be prepared with all the necessary records and important information. This is essential for creating a smooth process as it will help facilitate the due diligence process that potential buyers will likely undertake. It’s also good practice to have all documents in order before putting your business up for sale.

Tax returns are an important document to provide prospective buyers. You should aim for at least three years of tax returns so they can get a better understanding of how your business has been performing over time. Potential buyers may even use this information to calculate future cash flow projections or assess the track record of the company’s profits and losses.

In addition, depending on what kind of buyer you’re dealing with, they might ask for additional financial statements such as balance sheets and income statements from previous years.

Being prepared with these documents will make sure you don’t forget anything during the sales process and ensure that everything goes as smoothly as possible.

Having all the required documents ready can help tremendously in maximizing value when selling your business, by making sure buyers know exactly what they’re getting into right off the bat.

Having everything organized beforehand will give buyers confidence in their purchase decision which could potentially lead to more money coming out of any deal you make – leaving both parties satisfied with the outcome.

Knowing what records and information to prepare ahead of time when selling your business is key in setting yourself (and them) up for success – without having any surprises down the line. Now that we’ve looked at some important considerations about preparing for a sale, let’s take a look at another critical aspect..

What Is EBIT /Operating Profit?

EBIT (Earnings Before Interest and Taxes) or Operating Profit is a key metric used when selling your business. It’s the total amount of money you make from normal operations, without taking into account any taxes or interest payments on outstanding liabilities.

Experienced transaction attorneys can help determine what an accurate EBIT for your company should be, as well as other important information before selling it.

To ensure everyone involved in the sale gets what they want out of the relationship between seller and buyer, understanding operating profit is essential.

When looking at your financials, pay attention to how much cash flow comes in through regular sales activity versus expenses associated with running the business itself—this will give you a good idea of where your Operating Profit lies.

To get an even clearer picture of where things stand financially:

  • Analyze past trends
  • Compare year-to-year changes
  • Check current profitability levels against industry benchmarks
  • Assess future outlooks
  • Consider new technology investments
  • Analyze customer pipeline projections

It’s paramount to have these calculations done accurately so potential buyers can assess if investing in the acquisition makes sense.

Having experienced professionals who understand all aspects of business valuation and M&A transactions ensures that no one walks away feeling like they got taken advantage of.

With clarity around EBIT/Operating Profit established, you’ll be ready to move onto figuring out what Seller Discretionary Earnings (SDI) are and why they’re relevant during a business sale process.

What Is Seller Discretionary Earnings (SDI)?

When it comes to selling a business, every penny counts. Seller Discretionary Earnings (SDI) is the measure of profit that takes into account all available resources – administrative expenses and non-operating expenses.

It’s often used in contract negotiations as an accurate reflection of a company’s true profitability. To truly understand SDI, you need the help of excellent accountants who can crunch the numbers for you.

To put this concept into perspective, let’s look at some examples from everyday life:

When negotiating with your boss for a raise, consider that they may be looking beyond just your base salary and want to see what value you can bring to the organization through other means such as customer satisfaction or sales growth

When trading stocks online, investigate how changes in margins impact return on investment so you know when to buy and sell

Scheduling recurring payments like car insurance or mortgage payments give you peace of mind knowing exactly how much money will come out each month

Analyzing data trends helps predict future outcomes which informs decisions about investments in projects or product lines.

The same principles apply when understanding seller discretionary earnings – by considering both operating and non-operating expenses in addition to administrative costs associated with running a business, owners can make informed decisions about their current financial standing before entering into any contract negotiations.

With these metrics established ahead of time, potential buyers have confidence that they are investing in a viable opportunity while sellers receive fair compensation for their hard work.

Understanding seller discretionary earnings is critical for any entrepreneur looking to monetize their success in a sale transaction.

What Are The National, Industry Accepted Pricing Methods For Selling A Business?

When it comes to selling a business, national and industry accepted pricing methods are essential. To ensure you get the most out of your business’s sale, familiarizing yourself with these methods is a must.

Regardless of whether or not you use an expert broker, understanding the market price structure will help you make sound decisions throughout the process.

Using a professional business broker can be incredibly beneficial for those who want to maximize their returns when selling their company. Brokers have access to resources that allow them to assess current market values and trends in order to analyze potential sales prices.

They also utilize contacts within the finance world which provides them with up-to-date information on mergers, acquisitions and other investment opportunities that might affect your bottom line.

Brokers have deep knowledge about what buyers are looking for in terms of financial performance and risk factors associated with each deal – making them ideal partners for guiding sellers through the entire process from start to finish.

Having an experienced advisor by your side means having someone who understands the nuances of valuating businesses as well as negotiating deals that benefit all parties involved in the transaction.

A knowledgeable broker will provide invaluable insight into how negotiations should proceed, helping maintain control over market conditions while keeping both sides happy with the end result.

With such expertise at hand, sellers increase their chances of finding qualified buyers ready to meet fairly priced offers quickly and efficiently – allowing everyone involved to move onto new ventures faster than ever before!

Business Brokers Will Market Your Business

When it comes to selling a business, many owners feel that they can take the reins and get the job done on their own. But hiring a business broker offers more than just an opportunity for success – they have access to the best resources and will maximize your sales process with ease.

Business brokers know how to market businesses for sale in ways that go beyond what most sellers are familiar with. They have insider knowledge of industry accepted pricing methods, as well as proven strategies to help attract buyers from across multiple markets.

With the right agreements in place, these professionals will give you valuable insight into the best way to move forward with your sale quickly and efficiently.

Using a business broker also gives you access to resources that aren’t readily available when going it alone. Their experience means they understand which tactics work best when connecting potential buyers with available opportunities – making them invaluable if you want to make sure you get top dollar for your hard-earned investment.

By leveraging their expertise, you may even find yourself presented with offers much sooner than expected.

So while there is no denying that self-management takes dedication and patience, enlisting the help of a professional doesn’t mean surrendering control. Rather, it’s about working smarter so that you can reap maximum rewards faster…even if your time frame is tight.

It’s this combination of taking responsibility plus having access to knowledgeable support that makes engaging a business broker when selling your company something worth seriously considering.

Get The Best Price By Using A Business Broker To Sell Your Business

Whether you are looking to sell a business or buy a business, using a professional business broker can be key to getting the best price. Business brokers provide expert advice and market your business in the appropriate channels so that it stands out from the competition within the ‘business for sale’ sector.

Here’s how they help:

  • Connecting with Potential Buyers: A good business broker will have an extensive network of contacts and can match buyers with sellers efficiently, which is important when considering franchise agreements or selling a company outright.
  • Negotiating Expertly: With experience in successful sales and acquisitions, these experts know what kind of pricing works best for both parties involved – something that might not always come naturally to those inexperienced in such transactions.
  • Understanding The Market: Brokerages keep up-to-date on trends and industry news, meaning they can advise you on where would be the most profitable place to list your business as well as demystifying any complex legal paperwork associated with buying or selling a company.

From finding potential buyers and guiding through the complexities of mergers & acquisitions, to navigating the transfer process –you benefit from their years of experience dealing with similar scenarios in this highly competitive sector.

Furthermore, having an experienced third party drive proceedings often helps foster better relationships between seller and buyer at every stage of the deal, leading to swift completion timescales and smoother handovers overall.

Finding The Best Broker To Help Sell Your Business

The decision to use a business broker when selling your business will be one that you will have to make, but can potentially be well worth the investment.

They provide expertise and support that you may not have access to on your own and are often times able to find buyers more quickly than if you were trying to do it all yourself.

The fees associated with using a broker are typically quite reasonable given the amount of work they put into finding a buyer for your business.

Tax implications should also be considered, as this will affect how much money you ultimately receive from the sale of your business, so make sure to consult an expert in order to fully understand what those implications might be.

Using a business broker can save you time and headaches throughout the entire process, making them almost indispensable when it comes to selling your small business.

With their specialized knowledge and experience, they’re able to negotiate better terms while ensuring that everyone involved gets fair representation during the transaction. So don’t hesitate. Start looking for an experienced broker today and reap the rewards of all your years of hard work.

Frequently Asked Questions

What Are The Fees Associated With Using A Business Broker?

Using a broker to sell your business will generally incur three types of fees: an upfront fee for their services, commission on the sale, and other miscellaneous expenses. The exact amount that each type will cost varies depending on the size or complexity of the deal, but it’s typically between 8-10% of the total sale price. It’s also worth noting that some brokers offer different payment plans in order to make their services more accessible.

Are There Any Tax Implications Associated With Selling My Business?

Taxes associated with selling a business can vary depending on the type of entity being sold and the details of the transaction itself. While some taxes may require payment immediately after closing, others may only become due when filing personal or corporate income taxes for the year in which the sale took place. A knowledgeable broker is well-equipped to provide guidance regarding any potential tax consequences related to a particular sale.

In addition, understanding how different tax regulations apply at both federal and state levels is critical for minimizing liability and maximizing profits from a sale. The assistance of an experienced business broker who specializes in taxation matters makes this process much easier by helping sellers understand their options and providing advice about strategies for reducing overall tax burden.

What Is The Average Length Of Time It Takes For A Business Broker To Sell A Business?

Ah, the age-old question: how long does it take for a business broker to sell your business?

It turns out, there’s no one-size-fits-all answer. The amount of time it takes for a business broker to sell your business depends on lots of different factors – like the size and type of business you’re selling, the location where it operates, current market conditions…the list goes on!

But generally speaking, if all other variables are equal (which they rarely are!), using a broker could shave weeks – or even months – off the process compared to DIYing it yourself.

For bigger businesses with more complex operations, sales typically take between 12 and 18 months; whereas smaller businesses usually only require 6-12 months.

Is There A Minimum Length Of Time I Should Work With A Business Broker?

Generally speaking, most brokers will provide services on a monthly or quarterly basis as part of their agreement when working together. This allows them enough time to effectively market your business while also understanding what potential buyers are looking for in terms of pricing and other details related to the deal.

It’s therefore wise to aim for at least 3 months if possible – this gives both parties ample opportunity to make sure all aspects related to the sale are adequately addressed and handled professionally. Additionally, some brokers may even offer longer contracts if needed depending on the specifics involved in each case.