If you are an owner of a small business and want to sell it or an aspiring entrepreneur looking to start your own business, you may be interested in buying or selling a business. But buying or selling a business requires a lot of time and hard work, and who is going to watch over your business if you are doing all the leg work? 

In such situations, a business broker such as Lloyds business brokers Melbourne comes into play. A business broker is a company or an individual who assists in selling or purchasing a small or medium-sized business. Business brokers estimate the value of a business, advertise it, and conduct interviews with potential buyers. 

why you should hire a business broker

What Does A Business Broker Do? 

Transferring ownership of a business or company is a complicated process. A business broker has to determine a fair business evaluation, make sure the accounting records and company finances are in order, advertise the business, negotiate a price, and close the deal. They also ensure confidentiality from interested buyers to not disclose details of a potential business sale. 

Working with a business broker is almost like working with a real estate agent. The only difference is a business broker helps you buy or sell a business, which is a more complex endeavour. 

Brokers also help buyers by presenting them with a range of suitable businesses that match their individual skill set and investment criteria.  

A broker acts as a channel to pass information between the buyer and the seller. Therefore, a broker collects all relevant information from a business on sale to pass on the details to a potential buyer. 

A broker also advises, provides guidance and other resources needed to make a transaction happen. Brokers are well connected with accountants, attorneys, finance professionals, and other professionals who may be needed to expedite the sale. Before a business is put on the market, brokers provide helpful advice to prepare the business for sale. 

All of the services a broker provides helps save time and money and let a business owner concentrate on their business. For buyers, a broker provides suitable businesses and motivated sellers that fit their passion, skill set, financial objectives, investment, and goals. 

Benefits Of Hiring A Business Broker 

Most business brokers have years of training and experience in selling and purchasing businesses. It is a complex procedure and requires many formalities, so hiring a business broker can be beneficial. 

  • Paperwork: purchase and sale of businesses require a lot of paperwork, all of which must be completed and submitted appropriately. A credible business broker will help you through this process, making the sale easier and leaving you to reap the benefits of your business.  
  • Objectivity: as buying and selling a business is an emotional process, any slight miscommunication between the parties can result in a lost deal. A professional and skilful business broker can be impartial in the process, and calmy negotiate the sale. 
  • Confidentiality: selling a business is different from selling a house or property, where you want everyone to know about it. Contrarily, selling a business demands discretion so as not to endanger the confidence of employees and customers, keeping the business running as usual. 
  • Marketing: a seasoned business broker knows who is buying what and has resources. They know how to read a market and spot “tire kickers” from serious buyers. An experienced broker also knows how to market a business to attract potential buyers who can appreciate its fundamental values rather than getting caught up in unnecessary details. 
  • Closing the deal: an experienced broker uses all their expertise to ensure that the deal is beneficial to both parties. 
  • Companies also hire brokers such as Lloyds business brokers Gold Coast to purchase suitable companies or increase the likelihood of selling. Business brokers have the expertise and contacts that ensure a smooth transition, financially benefiting both parties. 
  • Business brokers also specialize in corporate sales, mergers, acquisitions, and business sales, and have the connections to provide clients with the best opportunities.

Business Broker Commissions 

With all the benefits a business broker may provide, their services aren’t cheap. Business brokers charge anywhere from 5% – to 10% of the business’s selling price. Some business brokers also charge an upfront fee because of all the time and expense spent preparing a market package, placing value on a business, going through its financial ledgers, assisting the seller, and confidential marketing. However, this varies according to the broker, and the fee is usually deducted from the commission paid at closing.  

While it does cost a lot of money hiring a business broker, consider the commission as a kind of insurance, as a broker will protect your investment and place a proper value on it. They may even be able to get more money for the business, handle a lot of leg work and negotiations, coordinate between lawyers, bankers, CPAs, and insurance agents, whereas selling a business yourself would cost you time, money, sleep, and maybe even your sanity.  

Tips For Hiring A Broker 

There are both good and “not so good” brokers similar to any profession. Here are some basic steps that you should always take before hiring a broker: 

  • Ask for references: any good broker will have a good reputation and multiple satisfied customers who would be more than happy to provide testimonials. 
  • Interview 3 – 4 brokers: interview brokers face to face, ask them about their experience, areas of expertise, training, connections, and charges.  
  • Review their resume: how long have they been in the business, do they have a professional certificate, an extra badge of honour, how many total transactions they have done, and if they specialize in a particular industry.  
  • Assess track records: calculate the percentage of businesses they’ve sold against the ones they’ve tried to sell. 

In Conclusion 

When outsourcing a business broker, make sure there is good chemistry between you two. There should be good communication and understanding as this will play an essential role in completing the transaction.  

The broker charges you for all the tasks needed to successfully and beneficially sell or buy a business. Make sure that the broker you hire has your best interests at heart. The broker should be able to negotiate successfully and fulfil that transaction in a professional and timely manner. 

Ensure that you sign a contract that specifies what kind of marketing your broker will do, and the process remains discreet. For extra peace of mind, hire a broker that represents an association committed to holding ethical standards of conduct and professionalism.