Selling a business you've spent years to build or taking the huge risk of buying one will be the most important transaction you will ever make, so many choose to work with business brokers. The broker's fee is typically 5 percent to 10 percent of the purchase price, either paid by the buyer or the seller.
If you're selling, the broker may also charge a retainer fee to cover costs associated with marketing the business. Unless you have extensive knowledge of the market and a lot of time to do the legwork, a broker may be your best bet.
A broker will help:
- Prescreen businesses for buyers. Brokers don't want to represent businesses that are overpriced or are reluctant to open their books.
- Cut through the mountains of paperwork (including everything from financing and escrow to licensing) associated with the sale of a business, saving both parties time and money and assuring the deal is carried out legally. Brokers serve as a go-between for the lawyers, CPAs, bankers and other agents needed to close the deal.
- Negotiate the deal, making the most stressful (and important) part of the process smoother and ensuring a fair price.
- Guide the buyer to the right business that matches his background and goals and provide advice throughout every step of the process.
Be an educated shopper
Make sure you're working with a reputable, experienced broker who will guide you to the business that is right for you.
Cast a wide net
Working with a network of brokers allows you to check out more business in a wider geographic area or reach more potential buyers. The best business for you to buy, or the buyer who will give you the best deal, may be a time zone away.
Run the numbers
How much is the business you're buying or selling really worth?
It pays to advertise
In addition to working with a broker, or if you want to go it alone initially and hire a broker later on in the process, placing an online ad for your business may be the way to go.
