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Pros and Cons of Working With a Business Broker When Selling Your Business

The majority of business owners only sell their company once in their lives. So, how do you ensure that everything goes smoothly? Many business owners consider dealing with a Business brokers in San Diego, a professional who specializes in selling enterprises, to ensure that they get the best possible price for their company. Is it always a good idea to do this? Let’s take a look at the benefits and drawbacks of working with a broker:

Why should you hire a business broker to sell your company?

1) A broker has (ideally!) sold a lot of businesses for previous clients, and you can learn the essentials of the process from them and avoid making costly mistakes.

2) They can operate as a transaction facilitator, ensuring that discussions go smoothly, the transaction moves forward at the appropriate pace, and the business is eventually sold with all parties satisfied.

3) Using a broker to sell your business may save your upfront expenditures, as many brokers will create sales collateral and advertise the business at their own expense in exchange for a commission when the firm sells. They may also know what advertising strategies provide the best “bang for the buck” in terms of exposing your business to as many potential buyers as possible.

4) They can offer experienced market advice and assist in the evaluation of potential acquisition proposals for your company. A business broker, for example, would normally provide a free initial estimate of your business’s sale price, as well as information on what similar businesses in your area have recently sold for.

5) A Business broker San Diego can assist in maintaining the sale’s secrecy. Buyers can engage with the broker rather than the business owner because there is a third party involved, making it easier to preserve the identity of the business for sale.

With so many reasons why a broker may assist in the sale of a business, it’s no surprise that the majority of businesses that are sold do so through the use of a broker. Working with a broker, however, has drawbacks that a sensible business owner should consider.

When selling your firm, here’s why you shouldn’t use a business broker.

1) A significant commission may be charged by Business brokers in San Diego. The commission amount is determined by a number of factors, including the final sales price, geographic area, and the broker’s abilities. It’s very uncommon to see a 10% to 20% commission fee on a “main street” style business selling for less than a million dollars. Some brokers will also offer a guaranteed minimum of $10,000 or $15,000, depending on the broker. Only engage a business broker if you believe the time and effort involved is worth the money, or if you believe they will increase the selling price by more than their commission.

2) A excellent broker is priceless, but a terrible (or even mediocre) broker is significantly more expensive than they are worth. In many circumstances, the deal will be lost due to the business broker’s incompetence. If you aren’t confident that the business broker can not only improve the transaction value, but also increase the likelihood of the business being sold, you should definitely handle the sale yourself.

3) Do not cooperate with a Business broker San Diego if you do not know what you want out of the transaction. Many times, business brokers may call you ahead of time to inform you that there are buyers interested in your company. Selling a business is a major choice that should be approached with caution. Make sure you’re speaking with a broker because YOU made the decision to sell, and you’ve done your homework on the process and the long-term implications of your decision.