Why Should You Consider Using a Broker?

Just as there are folks who manage to sell their own homes, there are certainly business owners who have succeeded in selling their own enterprises.  Whether it is worth the time, energy and heartburn is obviously up to every individual seller but some of the critical issues you should address before considering this option are:

• The value of a home is infinitely easier to determine than a business.  Similar homes in a location can be used as a baseline.  How do you value a business?  There are a myriad of ways to valuate larger businesses but small to medium sized enterprises simply do not fit any particular mold in most cases.  In fact, the majority of small businesses are valued at the price that they eventually fetch.  Cash flow, owner’s benefits, net income before taxes, and the Fair Market Value of existing FF&E (Furniture, Fixtures, and Equipment) help to determine a “ball park” but the market determines the final Sales Price.  Your best bet is to insure that there is a sufficiently open market among many potential buyers.  SBX provides that market.

• Screening a buyer can be uncomfortable for FSBO’s (For Sale by Owner) sellers - as well as the  buyer.   Working through a business broker gives you a professional buffer – we regularly interview and screen potential buyers so that you only meet with those folks who might reasonably be expected to make an offer.

• Do you have the time to communicate and/or meet with every interested party?  As experienced business brokers, we already know that every listing will generate a flood of inquiries over time – usually upwards of 30 – 50 (depending upon the listing) but only 1 or 2 of these eventually result in an offer.  Our job at SBX is to meet with each of these individuals until we find a buyer. 

• Do you have the sales/marketing/accounting skills to prepare a professional package for your business?  SBX prepares a professional package for every one of its clients, including website presence, a financial package that includes a cash flow analysis, owner’s benefit analysis, and an income tax return vs. financial statement reconciliation (whenever possible).   This package is not only provided to registered buyers, but explained to them in great detail.

• Many buyers seeking to avoid brokerage fees are bargain hunters.  It’s human nature.  Just as the FSBO seller is hoping to shave selling expenses, many of their potential buyers are hoping to do the same.  In many cases, any savings earned by not retaining a business broker evaporate in the negotiation process. 

• What is your time worth?  In an effort to avoid paying a brokerage commission, many FSBO sellers actually spend much more in terms of business disruption, lost opportunities, and their own compensation rates while working with potential buyers, vetting those buyers,  researching, negotiating, and closing.