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Featured by INC. Magazine
A Better Way to Buy or Sell a Business:
Business Intermediaries Facilitate Business Sales
By Catherine Bienert
Rogers, Chairman Emeritus,
Bottom Line Management, Inc.
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What Is a Business Broker?
What is a business? If you're the owner of a privately held company, it's your livelihood, your brainchild, and your identity. If you're the purchaser, it's buying a job after downsizing, taking a leap of faith that you can be an entrepreneur. For employees, it's a wish for steady income in an uncomplicated market. When is the best time to sell a business? It's when the business is doing well and you don't have to. Unfortunately many owners don't follow that pattern.
Where does the business broker or intermediary fit into this picture? A business broker is a trained specialist in the field of business transfers, just as an attorney is trained in law and a CPA in accounting. These are issues that are far more complicated than a real estate transaction. Owners, who would never think about writing their own contracts or doing their own taxes, often feel if they have run and grown a successful business, they should be able to handle their sale. What should buyer and seller expect from an intermediary beyond their introduction? Besides the time consumed in qualifying buyers, there are issues that are obviously emotionally and financially involved. And an intermediary's experience and knowledge of the whole story of your company - finances, competition, your market - gives him (or her) objectivity to effectively offer your business for sale and know whether a deal will or won't work. How do you know if your business is fairly priced? The broker may suggest a third party valuation to determine the fair market value of your business rather than just a pricing range. This is the best way to sell the business quickly.
Confidentiality is of course paramount. What about employees? Should they be told. Will key employees stay and if not, how will that affect the sale. Special packages may have to be negotiated for them as part of the offer. Owner financing always speeds the process. Determine ahead of time reasonable payments the cash flow of the business can support and still leave enough for the buyer to have a return on his investment to live on. You can often get your asking price if the terms are attractive enough.
Give yourself adequate time to plan your sale. Smaller businesses should expect to be on the market a minimum of five months; middle market ones at least a year. As with most things in life, it's the attention to preparation that leads to best results. A professional intermediary can help make the difference.
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