Selling a business WELL requires careful planning, meticulous execution, and a deep understanding of the market. These are all things a business broker can help you with. However, it’s not uncommon to wonder if getting a business broker is worth the hassle. In this article, we’ll highlight the top three pros of having a business broker by your side, and three important red flags to watch out for before you seal any deals.
How can a business broker help?
1. The sale price of your business
Putting a price tag on your business can be like trying to hit the bullseye. It’s tricky. A business broker has the skills to determine the true worth of your business, including how to calculate goodwill and the value of your business assets while considering current market trends. In short, they’ll help you name the right price for your business which is the first step to finding the right buyer.
2. Marketing and networking with buyers for your business
Business brokers have experience in creating professional marketing materials, including detailed business profiles, which help to attract the right buyers. They also often have a large, wide-reaching network of potential buyers and investors. Getting in front of a quality network can significantly expand the reach of your business sale listing and attract a larger pool of qualified buyers who are genuinely interested in acquiring businesses like yours.
3. Negotiating and structuring deals
Negotiating with potential buyers can be complex not to mention emotionally charged. A business broker can serve as an impartial mediator, helping you navigate the twists and turns of deal-making, ensuring both you and the buyer end up with a fair and fantastic outcome. They can also help navigate the intricacies of deal terms, financing options, and other critical aspects of the business sale transaction. They should also advise that you hire an independent business sale lawyer to review any agreement before you go to the signing table. The comparatively small cost of having a lawyer dot all the t’s can save you large headaches and money down the road.
3 red flags to check for before signing with a business broker
While a business broker can be a huge help, like any business contract, always exercise caution and thoroughly evaluate your options before signing on the dotted line. Look out for these three red flags in a business broker contract:
1. Unreasonable broker fees and commission terms
Make sure you understand the fees and commissions a prospective broker charges. You want to know exactly what you’re paying for and how much of your business sale price your broker stands to inherit following a successful sale. For example, a term that requires you to pay the broker’s full commission even if the sale of your business does not go through can leave you significantly out of pocket. An experienced business lawyer will help you negotiate with your broker and ensure that you only agree to fair and reasonable terms.
2. Lack of experience or poor reputation
It’s like reading reviews before trying a new restaurant. Always check a broker’s credentials, track record, reputation, and client reviews. Remember to ask a couple of key questions as well, including: Do they have experience selling businesses like yours? How many clients are they working with currently? How do you value a business? Selling a restaurant chain will be a very different process to selling an app. Ideally your broker will spend most of their time prospecting and negotiating the best deal for YOU.
3. Vague policies on confidentiality
When selling your business, it’s a good idea to keep the specifics of your sale on the down low. Before the sale has been finalised, a great broker will have a clear process on how they ensure confidentiality throughout the sale process – especially in the early stages. A broker can help prevent upsets with customers and competitors by providing only teaser information about your sale, qualifying the financial stability of potential buyers and ensuring all qualified buyers sign non-disclosure agreements prior to receiving any specific or sensitive details of your sale.
Selling your business in Sydney is exciting and nerve wracking. A business broker can be the ultimate sidekick but remember to give any contracts a thorough review, ask questions, and find a business broker who’s going to be the best match for YOUR business sale. Better yet, engage an experienced Sydney business sale lawyer to help you get the best result from working with a business sale broker. Your contract of sale should be comprehensive, straightforward and protect all your interests, even the ones you may not have thought of. With the right blend of professional guidance and your entrepreneurial spirit, you can be well on your way to a successful business sale journey.
Get in touch with our helpful and responsive team of Sydney commercial lawyers today. The earlier you engage an experienced business sale lawyer, the sooner you can have peace of mind that all aspects of your business sale are accounted for.