Selling a business is a complex process. Working with an experienced and credentialed business broker helps streamline the process, optimize the sale price and terms, and increase the probability a business will thrive under new ownership. They have the knowledge and experience to successfully guide sellers and buyers through the entire sales process. Eric Gall, founder and licensed broker of Edison Business Advisors, explains nine valuable tasks a business broker performs to assist in selling a business. These tasks include:
1. Properly Preparing the Business for Sale
A business broker works with sellers to examine their business’s financial records, compile a list of assets, evaluate leases or property values, identify value factors, and ask details about their business to determine its value and price. They also use this information to write a Confidential Business Review (CBR) to answer the most common questions buyers will ask to determine if the business is the right fit.
2. Soliciting Lenders for Financing Pre-Approval
A business broker often has a business pre-approved by lenders to help attract buyers by giving them confidence the business can provide a reasonable income, support a loan, and offer a suitable return on the buyer’s initial investment.
3. Marketing the Business Confidentially
Maintaining confidentiality during the sales process is critical. A business broker writes advertisements that share enough information about the business to entice buyers to inquire, but at the same time not sharing so much information that it gives away the business’s identity. They require buyers to sign a non-disclosure agreement and provide proof they have the funds and experience to purchase and operate the business before sending them the CBR.
4. Facilitating Seller/Buyer Meetings
A business broker coordinates and facilitates meetings between sellers and buyers to help ensure smooth communication during the enter sales process. Multiple discussions may be required before buyers make an offer.
5. Structuring and Negotiating Agreements
A business broker works with buyers to structure a deal and prepare an offer. Negotiating a deal is a critical and emotional part of selling a business. A business broker acts as an intermediary to diffuse emotions, ensure the negotiation process stays on track, and assist in obtaining the best possible price and terms.
6. Managing Due Diligence
Once an offer is accepted, a business broker manages the due diligence process. They work with sellers and their advisors to provide buyers with the necessary documents to ensure the buyers have a clear understanding of the business’s financial, operational, and contractual aspects.
7. Assisting Buyers with Securing Financing
A business broker helps secure financing by connecting buyers with lenders, including those offering Small Business Administration (SBA) loans, and providing the lenders the documents they need to evaluate the business.
8. Managing the Closing Process
In many states, a business broker recommends a neutral third party-closing attorney to oversee the closing process to minimize conflicts. They also help set a closing date and location, assist legal teams with finalizing the legal documents, ensure all parties understand and follow all terms in the business purchase and sale agreement, and attend the closing.
9. Transitioning the Business to the New Owner
Post-closing, a business broker provides advice to assist sellers and buyers in transitioning the business. This may include providing advice on employee, customer, and vendor introductions, sharing knowledge regarding account transfers, and assisting with other items.
Conclusion
Selling a business requires careful planning and execution. Eric Gall explained nine valuable tasks a business broker performs to assist in selling a business. Engaging an experienced and credentialed business broker helps streamline the process, optimize the sale price and terms, and increase the probability the business will thrive under new ownership.
To learn more about Eric Gall, founder and licensed broker of Edison Business Advisors, click here.
To learn more about selling a business, visit Edison Business Advisors’ website
