What is a Business Broker?
A “Business Broker” is a person or firm that acts as an intermediary between sellers and buyers of businesses or business opportunities. Business Brokers, also called Business Intermediaries, Merger and Acquisition Advisors or Specialists, assist buyers and sellers of privately held businesses in negotiating the sale, purchase, exchange or lease of a business, or the assets and goodwill thereof, when the transaction involves any change in the ownership. The sale or purchase of a business is generally described as an asset sale, although stock sales are permitted providing certain conditions are met. A Business Broker should have broad knowledge and experience in business and various types of business structures, and in Arizona, must be a licensed real estate agent, broker, or associate broker.
Will my business sell?
There are over 5,500,000 businesses in the United States (with at least one employee). At any given point in time, approximately 20% of these businesses are for sale, which translates to over 1,000,000 companies on the market right now. Anyone who owns and operates his or her own business has, at one time or another, given thought to offering it for sale. A business can take 3 months to a year or more to sell and some businesses may never sell due to being over-priced, lack of performance, type of business or an unmotivated Seller.
A business should have good financial records, demonstrated cash flow, stability in the industry, good employees, future growth potential, and maintained equipment. Business location, reputation, longevity and product line are also key components when considering a sale.
Ownership transition is a critical juncture in the life cycle of a business and should be carefully planned. Sellers must often be willing to assist the new owner for a period of time after the sale.
What about confidentiality?
Seller confidentiality begins at our very first meeting and continues through-out the process. I determine the buyer’s financial ability to complete the transaction, secure an NDA (non-disclosure agreement) and obtain their background information before the release of any company information.
When is a good time to sell my business?
The best time to sell your business is when your business is financially sound and well-established. The company’s customer base must be intact and it’s debt situation under control. A distressed business will not retain it’s value or warrant the best price, regardless of your years of effort and hard work.
How does the broker get paid?
My fees are directly related to the selling price of the business and I typically get paid by the Seller when the transaction closes escrow.