Selling a Business
Do I Need a Business Broker to Sell My Business?
Written by Domenic Rinaldi for Gaebler Ventures
Selling a business? You want the best price for your life's work, right? That's why you need a business broker who can confidentially focus on selling your business so you can focus on getting the best price.
If you're ready to sell your business, you don't want to spend your time fielding offers from prospective buyers.
Rather, you want to make sure your business is running at peak performance. The solution is to engage a business broker and have the business broker focus on selling the business while you keep the business operations solid.
The first question I usually get from prospective clients is why someone should use my business-brokerage services to help them sell their business. Business owners are smart people, so they often think selling a business is something they can handle. In general, I wouldn't disagree. But a business owner shouldn't waste his time trying to sell his business.
As the managing director of Chicagoland Sunbelt, a business brokerage firm, I can bring more offers and a better price while maintaining confidentiality, which is a critical component of any business transaction. It is our job to help business sellers meet their goals.
I can explain to business owners how we determine the value of the business even in these challenging economic times. It is our job to get sellers realistic about the sales process. That includes the price a seller should be asking, the time it will take and, critically, how we bring in buyers with an interest in the type of business you are selling.
Let me explain how we do that. What follows are six reasons why it's in the best interest of your bottom line to hire a business broker if you're ready to sell your business.
Reason #1. A business broker maintains confidentiality.
News that a business is up for sale is potentially the most damaging thing that can happen to a successful business. Why is it for sale? Is there something wrong?
That's what your employees, vendors and customers might be asking. That could lead to meetings you're not ready to have or worse, a potential misunderstanding about the fundamentals of your business. Worse yet, not maintaining confidentiality could lead to employee and client defections which would significantly decrease the value of any business.
You want to keep a veil around the sales process. That confidentiality is jeopardized the moment you try to sell the business yourself. A business broker will keep the process confidential.
It typically takes six to 12 months to sell a business—it's in your best interest to keep the process quiet.
Reason #2. A business broker will reach more potential buyers.
My business is to help sell your business. How do I that? Well, there are many things I can do for you, but the most important is access to buyers. I have a database of 17,000 people in the Chicago area who are interested in buying a business. In addition, we actively market our clients in a confidential manner through many other channels to generate interest in their businesses. All of our marketing results in our database growing by 300 to 400 new buyers each month.
Perhaps you can find a buyer interested in your business. As a business broker, I can bring bids from four, five or six potential buyers specifically interested in your business. More buyers create momentum, and that should ensure a better price, better terms and at a faster sales pace.
Reason #3. A business broker knows the types of businesses people want.
Over the last two years, we've sold four Information Technology businesses. We've sold other types of businesses as well, of course, but I point the IT sales out for a reason: I know how many people looked at those IT businesses and how many people were seriously interested.
So when we get that next IT business to sell, we can go right to the people who were interested the last time. We know who is looking.
Reason #4. A business broker will develop a solid marketing plan.
The people who expressed interest in those IT businesses are not the only potential buyers a business broker will contact when the next one comes along. A new marketing plan is also be a part of the process.
At Chicagoland Sunbelt, we have a number of communication tools to reach potential buyers. Those include traditional methods such as a newsletter and a blog (LINKS), but we also contact, directly, the people who are interested in the type of business you're selling.
A business broker knows how to position your business to put it in front of the right prospective buyers.
Reason #5. A business broker will vet buyers for you.
At Chicagoland Sunbelt, we pre-screen potential buyers to separate the serious candidates from the tire kickers. We've sold hundreds of businesses and have established relationships with interested parties.
We've sold businesses to individuals, employee buyers, strategic buyers and private equity groups.
We have sold businesses in all the major industry sectors: Business Services, Distribution, Manufacturing, Food & Beverage, Franchises, Personal Services and Retail. We have hundreds of businesses in each of these sectors ranging in annual revenues from very small up to $30 million.
We know the buyers. That means you can spend your valuable time on the last reason:
Reason #6. A business broker lets you specialize in what you do best.
The best thing you can do for your business once you've decided to sell is to focus on your business.
To get the best price, your business should be running at optimal efficiency. Like a house you're getting ready to sell, you make repairs where necessary to make it as attractive as possible to a buyer.
That applies to business, too. Focus on what you do best: running your business. If you're spending time trying to sell the business, that means you're taking time away from meeting with customers and suppliers.
The sales process is long, generally taking about six to 12 months to successfully complete a transaction. That's a full-time endeavor.
So how much do business brokers cost?
Based on all of the reasons above, you may now understand the value that a business broker brings to the process of selling a business. Your next question is probably: What does it cost to use the services of a business broker?
At Chicagoland Sunbelt, we typically don't accept upfront fees or charge a retainer. We get paid only if your business is sold. Our fees are a percentage of the sales price and the fee structure depends on the scope of the work.
We know it can be a daunting process to pick a business broker. Make sure you pick a qualified business broker. For example, Chicagoland Sunbelt is certified by the International Business Brokers Assoc., an organization with more than 1,800 cooperative business brokers and intermediaries across the world.
It takes time to sell a business. But it shouldn't distract you from doing what you do best: running your business.
Domenic Rinaldi is president and managing partner of Chicagoland Sunbelt, a business brokerage firm that focuses on helping people buy and sell businesses in Chicago and the surrounding Midwest area. Rinaldi is a Certified Business Intermediary (CBI) from the International Business Brokers Association and an expert in the business brokerage field. He brings more than 24 years of experience in merger/acquisition, sales, service, marketing and operations to the business brokerage arena. Domenic can be reached by phone at 773-243-1603.
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What questions do you have about choosing a business broker? Are there other benefits to using a business broker that we forgot to mention? Any downsides to using a business broker? We welcome your questions, comments and advice.