Why Use a Business Broker?

Selling a privately held business can be an overwhelming process. As a business owner, you have put a significant amount of time, effort, and resources into your business, and you want to ensure that you receive the best possible return on your investment. That’s where a business broker comes in. A business broker is a professional who can help you navigate the process of selling your business and maximize your return.

The top 5 reasons to use a business broker when considering the sale of a privately held business are:

  1. Expertise in the process to sell a business
  2. Knowing the market and finding buyers
  3. Experience in specific industries
  4. Managing Due Diligence
  5. Confidentiality

Whether you are selling to a 3rd party, setting up a family succession plan, or awarding significant equity to an existing employee, an expert can act as a fair and impartial intermediary to help achieve your exit goals. We will review in more detail the top 5 reasons to use a business broker in the rest of this blog.

Use a business broker for their expertise in the process to sell a business

Utilizing a 3rd party who is an expert in selling businesses, with a firm that has the certified business intermediary (CBI) designation, is advantageous compared to the time, money, and resource constraints of a business owner trying to learn the process, removing pricing biases, and sell a business on their own. A 3rd party business valuation is crucial when considering the sale of a business. A broker can help you determine the current value of your business by conducting a thorough analysis of your financials, assets, liabilities, and market conditions. This valuation is critical in determining if the time is right to sell your business and if the sale price is reasonable.

A business owner who tries to sell their business without conducting a valuation may not get the best possible return on their investment. In contrast, a business broker with experience in the valuation process can help the business owner sell at the right price. From valuation to building a marketing prospectus, finding buyers, negotiating offers, and finalizing a sales agreement, a broker can concentrate on the sale of the business and make sure the owner is not distracted by the actual operations of the business. We strongly recommend using a broker with a CBI designation, meaning they have the education, background, and credentials to effectuate a positive outcome for the sale of your business.

Use a business broker for their marketing and sales skills to find buyers

Building a marketplace for the sale and finding as many buyers as possible is critical. A business broker can help business owners create a marketplace for their business and find potential buyers. This process can be time-consuming and challenging for a business owner. However, a business broker has the expertise and resources to create a comprehensive marketing plan, reach out to potential buyers, and facilitate negotiations. By finding as many buyers as possible, the business owner can receive the best possible price for their business and leverage on negotiating deal terms favorable to the seller

When it comes to finding buyers, a business owner should avoid using a broker who relies solely on their pre-existing network. A business broker who knows how to use modern sales technology (contact acquisition tools like ZoomInfo, scraping tools like PhantomBuster, communication automation like Salesforce, Outreach, project management tools like Monday, Google Sheets, Smartsheet, etc.) can help the business owner leverage various channels to reach a large number of potential buyers. This could be competitors, ancillary businesses looking for a product extension, high net-worth individuals wanting to move from corporate America to acquisition entrepreneurship, private equity, or investors. This can significantly expand the pool of potential buyers and increase the likelihood of finding the right buyer quickly.

A business broker who is adept at using modern technology can help streamline the selling process and facilitate communication with potential buyers. They can use online tools and marketplace platforms to list the business, share documents, exchange messages, and track the progress of the sale in real-time. This can make the entire process more efficient and transparent, which can help build trust with potential buyers and increase the likelihood of a successful and time-efficient sale.

Use a business broker for their experience in specific industries

Using a business broker with experience in the industry is essential. Business brokers have knowledge and experience that can be invaluable when selling a business. They can provide insight into market trends, competition, and potential buyers. A business broker with industry-specific experience can help the business owner determine the right time to sell and the right price to sell.

Additionally, a business broker can identify potential buyers who may be interested in purchasing the business, and often time brokers will have deep relationships with repeat buyers and sellers. An industry-experienced business broker can better handle the entire process, including pricing and marketing, due to their understanding of the market trends, competition, and risks inherent to the industry question.

Use a business broker to manage due diligence

The role of a business broker performing project management during due diligence is essential. Due diligence is a vital step in the selling process. It involves verifying the accuracy of the information provided by the seller, confirming the validity of financial statements, and assessing the business’s legal and financial risks.

Helping business owners navigate the due diligence process by providing necessary documentation, addressing potential buyer concerns, and facilitating negotiations between the parties involved. By having a business broker handle project management during due diligence, business owners can focus on their business operations while still being informed about the process. Using a business broker for this task is far more time-efficient and cost-effective than utilizing an attorney for this task.

Use a business broker to sell a business confidentially

If you are considering a sale of your business, you must consider confidentiality, privacy, and discretion to perform a valuation, find buyers, and transition ownership. The last thing you want during the entire process is for customers, vendors, or employees to find out you are considering a sale, look for an alternative provider, buyer, customer, or employer.

We advise owners to keep all cards close to their chest, no point in letting the rumor mill run rampant. During the end-to-end transaction process, a business broker will identify and qualify potential buyers, communicate with them, and screen out those who are not serious. Additionally, providing a buffer between the buyer and seller, and can help keep negotiations objective and professional. They can also assist with financing options for the buyer, which may increase the chances of a successful sale.

In summary, selling a privately held business can be a complex process that requires careful consideration, time, and planning. A business owner who uses a CBI-designated firm can benefit from their expertise in valuation, industry experience, marketing, project management, and deal execution. Most importantly, a business owner can keep their eye on the prize during the transaction, ensuring the business operates as normal and there is no drop off in performance during the company sale. By leveraging the business broker’s expertise, the business owner can minimize risk, optimize their sale price, and achieve a successful outcome in the sale of their business.

About Exit Equity

Since 2005, we’ve helped hundreds of business owners make the biggest change in their career—shifting from owning a successful, privately-held business into a relaxing, passion-driven retirement. Meet the experienced team behind the work.

Learn More