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Business brokers, also called business transfer agents, typically value the business, advertise it for sale, handle the initial discussions with prospective buyers and assist the owner of the business to sell it. They are paid either a fixed fee or a percentage of the sale price. Business brokers attract prospective buyers in a variety of ways. These include listing limited details of available businesses on their websites, bulk buying advertising space in business newspapers and magazines, and selectively targeting prospective buyers by identifying them and approaching their management or their owners to gauge interest. The business broker is often the one who handles the Confidentiality Contracts on behalf of the seller, vets prospective buyers and otherwise advises the seller in the disposal of the business or the business assets. Buyers sometimes retain a business broker to source them a particular kind of business. In the US, licensing of business brokers varies by state, with some states requiring licenses, some not; and some requiring licenses if the broker is commissioned but not requiring a license if the broker works on an hourly fee basis. State rules also vary about recognising licensees across state lines, especially for interstate types of businesses like national franchises. Some states, like California, require either a broker license or law license to even advise a business owner on issues of sale, terms of sale, or introduction of a buyer to a seller for a fee. See http://www.medicalpracticeappraisal.com/images/brokerage_letter.pdf The leading association of business brokers is the International Business Brokers Association or IBBA . Many states have their own associations. Reasons to Use a Business Broker to Sell a Business Business brokers know buyers that are looking for a business to buy and their marketing and sales efforts are directed to business buyers. These are individuals, other businesses, or private equity groups that are looking for a business to buy. Business brokers have businesses for sale. Their inventory of businesses for sale attracts more buyers for a business. Many buyers buy a different business than the one they initially contact brokers about. By offering a number of businesses, they attract more potential buyers that will be exposed to a business. Many business brokers are trained and experienced at valuing businesses. They recast the earnings of a business in order to show a buyer all of its economic benefits, thereby increasing the value of a business to the buyer. Their expertise helps sellers set the right asking price for their business and helps buyers understand how to value a business. Their expertise in selling businesses helps sell a business. Buyers and sellers are frequently not familiar with all of the business buying/selling process and business brokers are helping both in order to facilitate a sale of the business. Business brokers have procedures to maintain confidentiality in the sale of a business. It is very difficult to maintain confidentiality without an intermediary, like a business broker. A buyer must be qualified and sign a confidentiality agreement before learning that your business is for sale. Business brokers are experienced in marketing a business without identifying it. Business brokers help buyers get financing to buy a business. Business brokers provide skilled negotiating for business sellers so sellers end up with a better price. By using a business broker to sell a business, an owner has the time to continue to run the business. Edited by Marc Gudema from a webpage, "Should I Use a Business Broker to Sell My Business?" April 30, 2006 |
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