The decision to sell a business can be both exciting and stressful. Business owners who have put years of hard work into getting their companies established want to receive a good price, but few know what it takes to value a business, market it effectively, attract qualified buyers, and ensure that the sale goes smoothly. Thankfully, there are qualified business brokers available to help. Read on to find some helpful tips for how to sell a business with the help of a broker.
Table of Contents
Find the Right Broker
Arguably the most important thing when selling a business is finding the right broker to help. Since sellers typically pay the broker’s fees, they should take the time to shop around. Before hiring a broker, consider the professionals:
- Web presence
- Prior experience
- Typical market listings
- Recent reviews
- Pricing and fee schedule
Do some research before reaching out to anyone. Find several qualified candidates, then schedule initial consultations. Use these meetings as an opportunity to ask questions and get a feel for how the brokers operate, then choose the one that seems like the best fit.
Ask for a Business Valuation
Before signing a listing agreement, ask the broker to provide a business valuation that includes both a cash price and a price with terms. The broker should be able to provide a reasonable estimate of what the business is worth, usually with the help of a business appraiser or another industry expert. The majority of small businesses don’t sell, even with the help of a broker, because their listing prices are unrealistically high or the terms and conditions are too strict. Make sure the broker is honest about what business owners should expect in the current market and willing to consider multiple ways to structure a deal.
Make Sure the Business Is Ready for Sale
It can take multiple years to prepare a business for sale, and business owners typically do the bulk of this preparatory work. Business brokers should also help with preparing the business for the marketplace, though.
Sellers should expect to provide copies of all relevant documents, including not just tax returns and the previous several years of financials but also lease agreements, contracts with vendors, equipment leases, and other essential paperwork early on in the process. Business brokers should take the time to review everything and make suggestions to clients about how to better prepare their businesses for sale.
Expect Continuous Communication
Time kills business deals, so good business brokers know how important it is to move quickly. They also understand the value of effective, efficient communication. Clients should make their expectations about when they will receive updates and progress reports clear from the beginning. Regardless of a business owner’s preferred level of involvement, it’s important for business brokers and their clients to maintain open lines of communication and to meet at least once a week in person or by phone to discuss how the marketing and sales process is moving forward.
Find a Broker ASAP
It takes time to sell a business, so start looking for a qualified broker as soon as possible after making the decision to let it go. Both parties will need to put in some serious legwork to prepare the business for sale, find qualified buyers, and negotiate a favorable deal, but the business broker will be able to do the majority of this work alone after the initial stages. Getting through the initial hassles of tracking down relevant documents, improving financials, and creating listings are tough, but don’t put it off.