What is a Business Broker exactly? And why should you decide to work with a business broker to either sell your business or buy a business? For many, it is not very clear which role a business broker can play whilst sell or buying a business. There are many aspects that come with our profession and nearly none of it is straight forward. As a business broker we play an important role in the transaction of selling/buying a business and this is why!
What is a Business Broker and what is a Real Estate Agent?
Business Brokers perform a similar role to Real Estate Agents. They act on behalf of the seller for a success fee if they sell the proprietors asset.
The difference is that the Real Estate Agent sells a house- and the Business Broker sells the business for their client.
The other major difference is that the Business Broker has a far more difficult and complicated task. So what is a Business Broker? And why do they have a more difficult and complicated task than a Real Estate Agent? Well… A house will always end up selling once the asking price drops to meet the market. It is only a matter of time. However, many businesses will fail to sell no matter how far their price is discounted. This can be because they lack maintainable profits or because they have a potentially fatal flaw which buyers shy away from (for example, a demolition clause in their lease).
Business Brokers also have to contend with many more stakeholders in the sale of a business than a Real Estate Agent does in the sale of a house.
What does a business broker do?
People such as Accountants, Lawyers, Conveyancers, landlords, Managing Agents, Franchisors and Government Licensing Authorities can all veto the sale of a business. Therefore it is critical that you (the Seller) engage a highly professional Business Broker. One who can manage all these conflicting interests and recommends you deal with AIBB member Business Brokers. As members of the AIBB these brokers are highly regarded and engage in continuing professional development programmes.
These Business Brokers also have a great network of knowledge from which to draw. AIBB Business Brokers have the skills, empathy and patience to nurse the transaction thru to a successful settlement.
Good read: 15 questions to ask when buying a business >
What makes a good business broker?
Selling a business is no easy task so you want to make sure that you are employing a business broker that is up to the challenge. You should first check that they are accredited and registered with the AIBB as mentioned above. A good business broker should also have good communication and personal skills. This is something you should be able to tell upon first meeting them. Good people skills equates to good connections, which ultimately means more potential buyers and a smoother sale. Finally, experience is important here. Does your business broker have experience in dealing with your type of business? If so how many of these experiences ended up as sales and how long did it take? Don’t be afraid to conduct a small interview before settling on a broker.
Good read: how to find a business broker that optimizes your result >
Why you should work with a business broker
There are many advantages to working with a business broker both when buying and selling a business. Both can be an overwhelming experience, especially if it is your first time buying or selling a business. A good business broker will have the relevant connections and experience to ensure that the process is smooth and fair for both parties. They can negotiate prices and will ensure that any details are not overlooked so that everyone is happy in the long run. Employing a business broker is kind of like hiring a guide to take you through the jungle- they know the lay of the land and can lead you securely through the tricky terrain!
Good read: Why use a business broker: 10 reasons for using a business broker
Work with a business broker for selling a business
Selling a business requires a lot of work and using a business broker to help you can free up some of your time during the process. Perhaps you have some idea of the type of buyer you would like to sell you business to but have no idea where to find them? One of a business brokers main roles is to use their extensive contacts to assist you in finding potential buyers. They can also assist you in determining the true value of your business and a fair asking price that works for you. Marketing a business for sale is much easier with a business broker as they have a good knowledge of how and who to target. They will speed up the process of the sale and and also assist you with any paperwork- which is always appreciated!
Work with a business broker for buying a business
When buying a business it is also a wise move to work with a business broker. It is a business brokers job to know about businesses for sale in the area, they will be able to help you find your perfect match from the businesses that are available in the area that you are looking at. A business broker will also have some knowledge on the quality of a business for sale. Having a business broker to help you ask all the essential questions before you sign the cheque is a real advantage. They will ensure that all the finer details are in order and that no stone is left unturned. Their extensive contact list will also be of value to you. They will be able to connect you with accountants, lawyers and other useful people that you may need to speak to along the way!
Buying or selling a business in Perth, Western Australia?
Are you interested in buying a business in Perth or selling a business in Perth or elsewhere in Western Australia? In GMO you will find a reliable partner who grew to become WA’s preferred business broker. In our portfolio with businesses for sale in Perth and WA you will find a wide range of businesses in different business sectors. Our specialized business brokers are happy to guide you on the exciting path of becoming a business owner or selling the business that you have built from the ground up. Contact us for more information.
For more information about our services here at GMO. To speak with a qualified and knowledgeable Business Broker, give us a call on (08) 9481 4422.