Paint jobs, kitchen creations, crafts – you name it, there are plenty of things out there that are worth doing yourself. But when it comes to life’s more high-stakes endeavors? You’re pretty much always better off going with a professional.
This is especially true when it comes to handling the potential sale of your business.
While you may be the business owner, that position alone doesn’t make you the right person to oversee a transaction with buyers. It can actually mean you’re less suited for such a role because of the personal investment you already have in the deal.
If you’re planning on selling your business and are weighing whether hiring a third party or DIY is the better option, look no further. This article will provide key insight into the reasons why selling your business with the help of a professional is always the best call.
The Difference Between FSBO and Hiring a Business Broker
When choosing to list their business for sale on the market, people generally have two options: doing it themselves or hiring a business broker. The first approach, often referred to as FSBO, or For Sale By Owner, involves handling everything from preparing documents to working with buyers’ agents on one’s own. Whether it’s due to a tight budget or desire for as much control over the transaction as possible, sellers forgo professional assistance through this route.
The alternative option, working with a business broker, is the exact opposite of FSBO – it involves delegating the responsibilities of a sale to a qualified third-party firm or independent professional. Through this approach, brokers manage transactions on behalf of sellers, whether that means creating market listings or negotiating with potential buyers. People generally choose this option when they don’t have the bandwidth, or want to avoid the stress of, handling a sale on their own.
Why Hiring a Business Broker is Always the Better Option
While FSBO and hiring a broker both have a technical place in the world of business sale, the latter is almost always a better option for owners. Here’s a look at the key reasons why:
Hiring a Business Broker Removes Emotion From the Transaction Process
If you’re anything like most business owners, you probably have a deep investment (whether it be emotional, financial or both) in the company you’re selling. And that would make sense; people don’t just get to the status of ownership without hard work – they’re in the position that they are because they’ve either built their company from the ground up or proven a long-standing devotion to it.
While this can be a good thing in a lot of ways, it isn’t always ideal when it comes to the transaction process. Emotional attachment can often hinder rather than help negotiations, especially when it comes to haggling over numbers.
A business broker will always be more level-headed during the sale than the owner because they don’t have that same personal investment in the company. Their job is to negotiate on behalf of their client to make sure they get the best possible outcome – not to reminisce about good times or wax poetic about the business’s bright future. This allows them to be more impartial, which is critical when it comes to making well-thought-out decisions about an offer.
Having a Business Broker By Your Side Can Make Your Business More Appealing to Buyers
While it’s easy to think of business brokers as glorified salespeople, their role in the sale process is much more complex than simply finding a buyer and closing a deal. In addition to marketing your business and handling offers, they also play an important role in preparing your business for sale.
This generally includes putting together a comprehensive package of materials – like financial statements, tax returns and list of company assets – that potential buyers will want to see. Brokers will also work with you to establish a realistic asking price and help you create contingency plans in case the sale doesn’t go as planned.
The level of due diligence that business brokers conduct can actually make your business more appealing to buyers. By having all of your ducks in a row and being able to provide potential buyers with a wealth of information about your business, you’re setting yourself up for a smoother, more successful transaction.
Selling With a Business Broker is Quicker and Easier Than Going the FSBO Route
There’s no sugar-coating it – selling a business is a time-consuming process, no matter which route you go. But going the FSBO route is often even more time-intensive than working with a business broker.
Not only do you have to handle all of the tedious details that come with any business sale – like putting together marketing materials and conducting due diligence – but you also have to manage the day-to-day operations of your business. This can make it difficult to find time to properly market your business and vet potential buyers, which can lengthen the sale process.
When you work with a business broker, on the other hand, you can continue to focus on running your company while they handle the nitty-gritty details of the sale. This not only saves you a significant amount of time and energy, but it also gives you a much better chance of getting top dollar for your business.
Better Valuations and ROI
When it comes to valuing a business, there’s a lot that goes into the process – from determining things like earning potential to conducting thorough market research. This is an area where business brokers particularly excel. Not only do they have the resources and knowledge necessary to provide accurate business valuations, but they also understand how to properly market a business to buyers. This combination often leads to a higher selling price and better ROI for owners.
Business Brokers Can Ensure Your Transaction Is Confidential
One of the biggest concerns that business owners have about selling is confidentiality. After all, if word gets out that your company is on the market, it could potentially jeopardize your business – and that’s the last thing you want.
This is another area where working with a business broker can be extremely beneficial. Because they understand the importance of discretion, brokerages typically have systems and processes in place to ensure that your transaction is as confidential as possible. From nondisclosure agreements to working with a limited number of buyers, they’ll take the necessary steps to ensure that your sale stays under wraps.
Business Brokers Specialize in What They Do
As a business owner, there’s no doubt that you have specialty in your own field. After all, that’s how you’ve become so successful. But what you probably don’t have is expertise in the art of business sales. How many times have you negotiated a supplier contract or successfully closed a big deal? Hundreds. What about sold a business? Probably zero.
Business brokerages exist for one reason and one reason only: transacting the purchase or sale of a business. It’s what they’re trained to do and, more importantly, it’s what they’re good at.
When you hire a broker, you have the benefit of working with a professional who knows the ins and outs of business sale like the back of their hand. From marketing to due diligence, they’re familiar with all the steps that need to be taken to ensure a smooth, successful transaction.
Not to mention, brokers also have a wealth of experience and knowledge about the market that they can draw on to help you price your business accurately and find the right buyer.
Business Brokers Have a Network of Buyers Ready to Go
When you sell a business on your own, finding buyers can be one of the most challenging and time-consuming aspects of the process. Not only do you have to identify potential buyers, but also find a way to reach out to them in a professional and productive way.
This can be a difficult and daunting task, especially if you don’t have any experience with business sales.
Business brokers, on the other hand, have an extensive network of buyers that they’ve built up over the years. In many cases, they may even have buyers who are already interested in businesses similar to yours.
This can benefit you in a number of ways. First, it saves you a lot of time and energy that you would otherwise have to put into finding buyers. Second, it increases the pool of potential buyers for your business, which can lead to a higher selling price.
You’ll Have More Time to Focus on Your Business
Selling a business is a full-time job. From start to finish, the process can take months – sometimes even years. And during that time, you’ll be pulled away from your day-to-day responsibilities as a business owner.
This can be detrimental to the business, as it can lead to a decline in sales, profit, and morale.
Hiring a business broker to handle the sale of your business takes a lot of the pressure and responsibility off of your shoulders. This frees up your time so that you can focus on running your business and keeping it the best it can be before eventually handing the keys over to someone else.
While there are tons of great things to DIY out there, selling a business isn’t one of them. The process is long, complicated, and full of potential pitfalls.
Working with a business broker takes a lot of the risk and stress out of the equation, leaving you with more time to focus on your business and ensuring that it’s in the best shape possible before you sell.