Business brokers, also called business transfer agents, or intermediaries, assist buyers and sellers of privately held business in the buying and selling process. They typically estimate the value of the business; advertise it for sale with or without disclosing its identity; handle the initial interviews, discussions, and negotiations with prospective buyers; facilitate the progress of the "due diligence" investigation and generally assist with the business sale.
Types of services that a broker can provide
Since each state's laws may differ from others, it is generally advised that prospective sellers or buyers consult a licensed real estate professional.Some Examples:
* Comparative Market Analysis - an estimate of the businesses value compared with other businesses for a similar type. This differs from an appraisal in that businesses currently for sale may be taken into consideration (competition for the subject business).
* Exposure - Marketing the business to prospective buyers.
* Facilitating a Purchase - guiding a buyer through the process.
* Facilitating a Sale - guiding a seller through the selling process.
* FSBO document preparation - preparing necessary paperwork for "Sale By Owner" sellers.
* Hourly Consulting for a fee, based on the client's needs.
* Preparing contracts and leases. (Not in all states.)
Business brokers and sellers
Services provided to seller as client
Upon signing a listing contract with the seller wishing to sell the business, the brokerage attempts to earn a commission by finding a buyer for the sellers' business for highest possible price on the best terms for the seller. To help accomplish this goal of finding buyers, a business brokerage commonly does the following:
* Ensures Confidentiality--Brokers have established systems in place to protect the confidentiality of a business.
* Appraisals--Most business owners have no idea what their business is worth. Certified Business Brokers are trained in business valuation and can help business owners understand the true value of all their hard work and sacrifice. Learn more about appraisals at [1]
* Market Knowledge--Brokers make their living selling businesses. They are in the market on a daily basis conversing with Buyers. A local business broker understands the local market as well as what a business is worth.
* Saves time and stress
* Listing the business for sale to the public, often on a Multiple Listing Service, in addition to any other methods.
* Based on the law in several states, providing the seller with a business condition disclosure form, and other forms which may be needed.
* Preparing necessary papers describing the business for advertising, pamphlets, tours, etc.
* Advertising the business. Advertising is often the biggest outside expense in listing a business.
* Being a contact person available to answer any questions about the business and to schedule showing appointments
* Ensuring buyers are prescreened so that they are financially qualified to buy the business; the more highly financially qualified the buyer is, the more likely the closing will succeed.
* Negotiating price on behalf of the sellers. The seller's agent acts as a fiduciary for the seller. By not being emotionally tied to the transaction, Business Brokers are in a position to more effectively negotiate on a Seller's behalf. This may involve preparing a standard offer to purchase contract by filling in the blanks in the contract form.
* In some cases, holding an earnest payment in escrow from the buyer(s) until the closing. In many states, the closing is the meeting between the buyer and seller where the business ownership is transferred and the businesses name is conveyed.
Business brokers attract prospective buyers in a variety of ways, including listing limited details of available businesses on their websites and advertising in business newspapers and magazines. Brokers also directly approach prospective buyers and sellers to gauge interest.
