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FAQs
Why use a business broker?
Advisory
The business owner is an expert at running the business but may
not be as knowledgeable about the selling process. A broker will
provide the business owner with strategic information regarding
market timing, market conditions, market price, financing options,
structuring the transaction and other information that is beneficial
to the owner.
Facilitator
The involvement of a broker will avoid procrastination and delay,
keeping the process uninterrupted with qualified buyers, financing
resources. A broker is in a better position to perform this function
than the owner as he/she is focused on the life cycle of the deal,
while the owner can focus on operating a profitable business.
Resources
A broker is a skilled professional in the mergers & acquisition
world and has established relationships with many professional organizations
which are required to complete the transfer of ownership. These
relationships will prove to be extremely beneficial to the business
owner and the buyers.
Negotiations
Selling a business is often emotional for the business owner. A
broker will act on behalf of the owner and will establish a strong
negotiating position without compromising the goodwill and relationship
between the principal parties. Thus increasing the opportunity to
receive “the best price” for the business.
Confidentiality
An owner could experience disastrous results by “leaking” that the
business is for sale. A broker will preserve the confidentiality
of the selling company during the process of marketing the business
and only share information on a “need to know” basis, avoiding consequential
damage if employees, customers, suppliers and competitors become
aware of the transaction.
How can sellers ensure
protection when financing a portion of the sale?
Sellers are always concerned about how they can protect themselves
when they sell their business and finance a portion of the transaction.
Listed below are several things sellers should consider to protect
themselves for a worse case scenario:
- Background check: A buyer's background such as credit reports,
personal assets, work experience and personal references should
be investigated.
- Life insurance: Buyer's can be required to maintain a life insurance
policy with the seller as beneficiary.
- Personal guarantee: A seller can require the buyer to personally
guarantee the loan from the seller.
- Asset restrictions: Depending on the circumstances a seller
may want to restrict the new owner's acquisitions, expansions
and sale of assets until the seller's note is paid in full.
What is the seller's role
after the sale?
Unless the buyer has experience in the seller's business, the buyer
will probably want the seller to stay on for a short period while
the new owner gets comfortable in the new business.
Except in the rare case of an all cash buyer, the seller is going
to be tied to the business to some extent until the buyer retires
the seller's note. Not only is it fair for the buyer to ask the
seller to advise and consult in the short-term, it's in the sellers
best interest to be available to help the new owner while he or
she learns the ropes. It also might be the key that helps to sell
the business faster and for more money.
Can All Business Broker
sell my business?
A broker cannot really sell your business because he does not know
how your business operates. A professional broker's initial job
is to get a business listed at the best possible obtainable price
and with realistic terms of sale.
The next job is to qualify buyers to keep you from wasting time
with people who are not financially qualified to meet your requirement.
Qualified buyers will be presented your business profile after they
have completed a Confidentiality Agreement.
The broker will then schedule a meeting between the business owner
and the interested buyer. The business owner will explain the business
to the buyer. After this meeting, the broker will work to get a
written offer to purchase.
The broker will then present the offer and after acceptance will
coordinate the due diligence process which precedes the closing.
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