Selling your Business? 12 FAQ's

1. What does a business broker do? A business broker is a professional who assists in the buying and selling of businesses. Business Brokers help business owners accurately value their business, identify potential buyers, oversee negotiations, and guide the business through the transaction process. They function as a buffer between the buyer and the seller, facilitating communication and ensuring the transaction goes as smoothly as possible. In certain States (Florida being one) a business broker must have a real estate license. The best business brokers will be members of the International Business Brokers Association (IBBA).

2. When should I hire a business broker? You should hire a business broker when you are ready to sell your business and need assistance with the process. It is often beneficial to hire a broker early to help prepare your business for sale, which could involve improving financial performance, resolving any outstanding issues, and enhancing the overall attractiveness of your business to potential buyers.

3. How do I choose the right business broker? Choose a business broker based on their experience, knowledge of your industry, proven track record, and how comfortable you feel with them.

4. How much does it cost? Business Brokers charge a commission as a percentage of the selling price of the business. This can vary based on the complexity of the sale and the value of the business. For small businesses, the range is typically 10%-15%. For mid-sized and larger businesses, a sliding scale if used.

5. How is my business valued? Business brokers use several methods to value a business, including the asset approach, the income approach, and the market approach. The chosen method will depend on the nature of your business. Brokers will also consider factors like the financial health of the business, the industry, the economic climate, and recent sales of similar businesses.

6. How long will it take to sell my business? The timeline can vary greatly, but on average, it takes six to nine months to sell a small business. However, it could take longer for larger or more complex businesses. Factors like the asking price, the condition of the business, and the market conditions can all impact the timeline.

7. How will you find potential buyers? Business Brokers use a range of methods to find potential buyers. These include advertising on business-for-sale websites, leveraging a network of contacts, and using targeted marketing strategies. They also vet potential buyers to ensure they have the necessary financial resources.

8. Will the sale of my business be kept confidential? Yes, experienced business brokers fully understand the importance of confidentiality in business sales. Bad things can happen if word leaks out prematurely to customers, employees, vendors, and competitors. Potential buyers will be required to sign a non-disclosure agreement (NDA) before any information is shared about your business.

9. What information do I need to provide to sell my business? You will need to provide detailed information about your business, including financial records, details of assets and liabilities, information on employees and contracts, and details of your operations. The look back period is typically 3-5 years. At an initial meeting, your broker will provide you with a list of documents needed.

10. What can I do to make my business more attractive to buyers? Improving financial performance, resolving any outstanding legal issues, maintaining a strong customer base, and ensuring your operations are running smoothly can all make your business more attractive to buyers. Buyers in particular want to know that the operation of the business will not be negatively affected by the change of ownership.

11. What role do I play once the business is on the market? After listing your business, you will continue running it to ensure its value does not decrease. It is important to keep your focus on the business and run it as you normally would. Your broker will need your ongoing assistance in providing the requested information, meeting with potential buyers, and working with your accountant or lawyer as needed.

12. What happens after my business is sold? After the sale, there is typically a transition period where you help the new owner understand the business. The specifics will be outlined in your sale/purchase agreement. After this, you are free to pursue other interests. However, most agreements will include a non-compete clause so you will need to be mindful of that.

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At Quorum Business Advisors we have over 15 years in the industry. We are a member of the Business Brokers of Florida (BBF), International Business Brokers Association (IBBA) and hold a number of prestigious accreditations. Please contact us today for a free consultation.