The top reasons sellers hire brokers are these:
- Brokers know how to sell businesses; most sellers don’t 24%
- Seller doesn’t want to be distracted from running business 16%
- Confidentiality preservation and knowledge of what/when to show buyers 14%
- Access broker’s database of potential buyers and investors 13%
- Maximize price buyers will pay for the business 9%
- Owner does not know how to find buyers 8%
- Prepare owner to sell and prepare business for sale 5%
- Broker understands and can depersonalize negotiations 5%
- Explain and handhold seller throughout selling process 2%
- Owner afraid of trying to sell by-owner 2%
- Help buyer obtain financing 2%
All 62 reasons:
- Access broker’s or an advisor’s database of potential buyers and investors
- Advertising run and paid by broker
- Affiliated brokerage or advisory offices may attract more buyers
- Assistance during escrow closing
- Background check on potential buyers run by broker or advisor
- Broker or advisor can confer with seller, legal and tax counsel about terms of sale
- Broker or advisor understands and can depersonalize negotiations
- Brokers and advisors enable buyers and sellers to access a broader pool of potential partners
- Brokers and advisors have broader third-party prospective from done deals and failed deals
- Brokers and some advisors know how to sell businesses; most sellers don’t
- Business advice re contracts (exclusive of legal advice)
- Buyer competition: Create and manage it
- Coach sellers to answer buyers’ questions and concerns
- Compensation basis is commission upon sale or partially contingent upon done deal
- Compile necessary information about the business
- Confidentiality preservation and knowledge of what/when to show buyers
- Continual followup with buyers for decisions
- Control buyers: Brokers and some advisors know what is appropriate and inappropriate
- Dealmaking team: Referral to accountants, appraisers, brokers and lawyers
- Deals almost die numerous times; Brokers and some advisors know how to revive them
- Define best probable price and terms before going to market
- Determine best offer price
- Determine best selling price
- Determine best time to offer business for sale
- Develop marketing strategy and plan its implementation
- Disclose, to buyers, sensitive information about the business
- Explain and handhold seller throughout selling process
- Financial analysis and recasting by broker or advisor
- Help buyer obtain financing
- Initiate contact with likely purchasers
- Intermediary can speak for the seller
- Maximize price buyers will pay for the business
- Mediate and negotiate with buyers
- Minimize interference with seller’s management of company
- Most buyers start with business brokers and Internet searches
- Negotiating strategy
- Owner afraid of trying to sell by-owner
- Owner does not have relevant capability to sell by-owner
- Owner does not have time to try to sell by-owner
- Owner does not know how to find buyers
- Owner doesn’t know the probable price buyers will pay
- Owner needs quick sale due to pressing crisis
- Owner referred to broker or advisor by happy seller
- Prepare owner to sell and prepare business for sale
- Prepare two versions of the business profile (teaser and full)
- Professional advisor recommends owner hire broker or advisor
- Qualify and screen buyers
- Receive, present and help evaluate purchase offers
- Reconcile differences between tax returns and financial statements
- Reduce frustration during offering and sales process
- Seeing the business from the perspective of buyers
- Seller does not have a network of contacts with access to buyers
- Seller does not understand the implications between strategic and financial buyers
- Seller doesn’t want to be distracted from running business
- Seller fears adverse effect if premature disclosure (about sale) to key employees and lenders
- Showcase the seller’s business to buyers
- Time savings broker or advisor provides sellers
- Understands local marketplace of businesses for sale
- Understands seller’s industry
- Unsolicited offer from a buyer requires expert help
- Using broker is the only way sellers know about
- Wants to get the highest price
By: Ted Leverette
Copyright 2011 Ted J. Leverette, The Original Business Buyer Advocate ®, “Partner” On-Call Network LLC.
Permission was granted to reproduce this report.