For many people, negotiating a deal can be a difficult and intimidating process. Business brokers negotiate deals every day. This experience and their knowledge of sales of similar businesses allows them to negotiate on your behalf with confidence.

Brokers can usually identify the signals when a buyer is prepared to negotiate and when they are not.

A broker only gets paid upon a successful sale. The higher the sale price, the higher their commission.

This provides ample incentive to reach a successful conclusion to negotiations.

 

SELLING A BUSINESS IS AN EMOTIONAL PROCESS

Typically, owners have invested considerable effort and endured great personal sacrifice in establishing a successful business.

They therefore have an emotional attachment to their business and sometimes an unrealistic perception of its value.

Direct contact between owners and purchasers can often be disastrous as owners can be offended by innocent remarks made by a potential buyer.

An insulted or emotional seller does not help in the negotiation process.

A broker can act as an intermediary, filtering comments and facilitating communication between the seller and buyer.

They act as translators between the seller and the buyer. For example, if a buyer is interested in the business but comments that the "plant and equipment is old and useless" a broker will translate that to the seller as "the buyer is concerned that usefulness of the plant and equipment is limited".

This translation process ensures that communication between all parties remains amicable.
 

BROKERS QUALIFY BUYERS AND STOP TYRE KICKERS

There are four types of people who will respond to a business for sale. They are:

· The competition;
· Tyre kickers - people who don''''t have the capacity or motivation to purchase;
· Genuine motivated buyers unable to obtain finance; and
· Genuine motivated buyers with finance

The first three are generally time wasters. The last type of buyer is the one who will make a purchase.

Brokers generally qualify potential buyers and weed out the first three types, concentrating their effort on the last type. Anyone who doesn’t use a broker needs to be prepared for time wasters.
 

BROKERS CAN ASSIST WITH FINANCE

Brokers maintain close relationships with financiers. They can direct potential buyers to professional financiers to help with the purchase of the business.

Brokers can also explain vendor financing and other options to assist with the sale.
 

BROKERS – DEALINGS WITH SOLICITORS AND ACOUNTANTS

Brokers can liase with solicitors and accountants to smooth the selling process. Professional brokers usually have a close relationship with accountants and solicitors.

During the sale process brokers can provide relevant information and advice to these professionals and can assist with documentation normally required by them.

A professional broker’s involvement can save the seller hundreds of dollars in legal and accounting fees through the presentation and preparation of information, documents and reports on the seller’s behalf.
 

BROKERS CAN PRESENT YOUR BUSINESS IN A PROFESSIONAL MANNER

A reputable broker will spend time with you to understand your business. The information provided to them is often collated into a professional document for presentation to prospective purchasers.

This document, usually called a business profile, contains comprehensive financial and non-financial information relevant to the sale of your business.

This document is a useful resource to a potential buyer’s banker, solicitor and accountant in assessing the business.

Without a business profile prepared by a professional broker, a seller is at a considerable disadvantage compared to others with better presented businesses on the market.
 

BROKERS USE RECENT SALES HISTORY

Brokers have sales histories on hundreds of businesses to help them form an accurate opinion of the value of your business and to assist in negotiating a price with prospective buyers.

In addition to this they have access to industry benchmarks and can draw comparisons with the seller’s business and the industry average.

This sort of information can be a valuable negotiating tool and is not generally available to sellers working without professional brokers.
 

BROKERS CAN MAINTAIN CONFIDENTIALITY

This is an extremely important point. The last thing sellers usually want is for their staff, customers or competition to know that they are selling because of the impact it may have on their business.

Brokers can maintain confidentiality by not disclosing information to buyers unless they have been qualified and signed a confidentiality agreement.

They can also control the release of sensitive commercial information that prospective buyers may require.
 

BROKERS KNOW OF POTENTIAL BUYERS AND CAN USE THEIR NETWORK OF CONTACTS TO HELP SELL YOUR BUSINESS

Most brokers keep a register of all their contacts and maintain a profile of buyers. This includes amongst other things, what price they are prepared to pay, the sort of industry they want to be involved in and previous experience in running a business.

In doing so, the broker is able to match business listings with buyers on their register.

Brokers also communicate with each other. If a property is for sale, they can network with other brokers and enter into a conjunctional arrangement - that is, act together to sell the property and split the commission.
 

BUYERS OFTEN CALL BROKERS INQUIRING WHAT BUSINESSES THEY HAVE FOR SALE

Brokers get inquiries from prospective buyers on a regular basis. Each inquiry is assessed to determine who is genuine and whether he/she can be matched up with a listed business.

Astute potential buyers recognise the value of this time saving process and contact a broker first.

Being listed on a buyer register means that as businesses for sale become available, the broker can present the information to a prospective buyer and gauge his/her interest.

Buyers and sellers both recognise this is a very effective way of transacting business.

People in the business loop understand that buying a business is a specialised process. Consequently, they prefer to go straight to the experts, rather than use other channels.

Also, buyers often feel more comfortable speaking to a broker rather than dealing with the business owner, largely because of the potential for conflict.
 

BROKERS SPEAK TO BUYERS EVERY DAY

Daily communication ranges from speaking to buyers interested in small ‘mum and dad’ businesses through to multi-million dollar turnover enterprises.

In their daily contact, brokers are also in a position to offer buyers alternatives if the preferred business type is not available.