You may be wondering if you own a business and are contemplating retirement: Should I sell my company myself or hire a Florida business broker?
There may be a decision to be made regarding whether to pass your business on to one or more of your relatives. One consideration is whether they are capable and interested in taking over the business. Sure, if the company already employs them, there will be a higher comfort level. You will be able to gauge their skills and interest in the company better.
A business broker may not be necessary if they are interested and possess the essential skills. To transfer the business, you only need to retain an attorney who will prepare the required documentation.
If you do not have family members with the skills or interest to run the company, there is much to learn about selling a business. This article will present a few points to consider when deciding whether to market your business yourself or hire a business broker.
IF YOU WANT TO RETIRE FROM YOUR COMPANY, WHEN DO YOU WANT TO DO SO?
Consideration should be given to when you would like to be fully retired and how you would like your transition period to be structured. A buyer may, for example, wish you to remain on for a transition period. Depending on the preferences of the buyer and seller, this transition period can vary significantly. In the past, we have witnessed transitions as short as one day and as long as eight years or more, and everything in between.
Choosing between selling your business yourself and hiring a broker
An example of a transition is where the seller includes one month of full-time work in the sale of the business, and then more is negotiable and sometimes included in the sale price. An agreement for consulting often allows the seller to work part-time after the first month and receive payments based on the number of hours or days.
The transition period is not a fit-all situation, as you can see. Business owners can ease into retirement through transitions. A transition would allow business owners to avoid having to start a new life immediately.
Many owners are motivated to work; they do not wish to work full-time and would prefer to spend more time traveling and letting someone else handle the tasks they do not want to perform themselves. Having a buyer, you enjoy working with and feel comfortable with is essential if this sounds appealing to you.
COMPARISON OF BUSINESS BROKERS AND PRIVATE SELLERS
Is it a good idea to hire a business broker to sell my company
Whenever a business owner contemplates retiring, they should begin to develop an exit strategy if they do not already have one in place. A large number of business owners lack succession plans and are more likely to sell their companies. A large number of them may wonder, “How do I sell my business?”? The process of selling your business can be accomplished in two ways: by hiring a broker or handling it yourself. Trying to sell a business without the assistance of a broker is similar to trying to sell a house without a real estate agent. It is possible to achieve this, but there is a great deal of paperwork and agreements to be negotiated between the seller and the buyer, and it’s much more involved than just selling a house.
DOES A BROKER NEED TO BE INVOLVED IN THE SALE OF A BUSINESS?
Whenever you consider retiring and selling your business, this is a question that comes to mind. Am I able to sell this business without using a broker? Of course! In the same way that many homeowners have sold their properties without the assistance of a realtor, many business owners have sold their businesses without the aid of a business broker. Companies sold in a private sale are typically successful only if they already have an interested buyer. The seller may still need to hire an M&A firm or attorney to assist with the ownership transition and related paperwork once the buyer has been identified. What is the best way to sell my business without a broker if I have no interested buyers?
SELF SELLING MY BUSINESS WITHOUT A BROKER
Many business owners weigh the pros and cons of selling their businesses without the assistance of a business broker. You must be able to do seven things to sell your business independently: determine `an appropriate business valuation, market your business for sale, meet with potential buyers, negotiate a contract of sale with business buyers, and complete all necessary paperwork and taxes. To complete the sale of your business at the final stage, you will need to hire an attorney. There is a substantial amount of financial risk involved if you attempt to finalize the sale of your business without an attorney’s assistance. In addition, ensure that you have an accountant to assist you in managing the tax implications associated with the sale of your business. Tax evasion may result in a fine or, worse, a tax citation.
A BUSINESS BROKER IS THE BEST OPTION FOR SELLING MY BUSINESS
Business owners who hire business brokers to sell their company have quite a few reasons for doing so besides the long list of things they would have to do independently. A business broker’s primary role is not just to find prospective buyers (although this is also important). We help our clients facilitate the sale of their business is one of the best things we do for them. Because we are professional business brokers, we know how to conduct negotiations and accurately assess the company. You should run away as soon as possible if you hire a business broker who cannot perform that function properly.
MEDIATION OF A BUSINESS SALE
At this moment, when you may be considering selling your business, you are probably contemplating retirement and being able to enjoy life outside of work. If you are discussing the terms of the sale of your business on the day that you decide to sell it, you will realize just how emotionally invested you are in your industry. Selling your hard-earned business will be emotionally challenging for you after spending countless years building it from scratch. To make the transaction transparent and efficient, a business broker can mediate and manage the marketing.
CONNECTING WELL WITH A POTENTIAL BUYER
An experienced business brokerage can assist in screening potential buyers financially and determine whether they are the type of individuals that sellers find desirable. We intend to find buyers who possess good personal skills and are flexible enough to allow sellers to pursue what they enjoy and are best at.
What are the reasons I should hire a business broker?
Additionally, the Business Broker usually introduces multiple potential buyers so that the seller has various options to choose from. A person’s chemistry cannot be calculated, which can only be seen by spending time with them. The process of buying and selling involves two parties, so buyers want a real estate agent they are comfortable doing business with.
Before a meeting, a Business Broker provides background information about the other individual and sets the scene for an effective appointment. In addition to helping to build confidence in the relationship, this will make it easier to focus on building it.
It is possible that you were ready to retire yesterday and wish to provide as minimal a transition period as possible. An experienced Business Broker can perform a search for potential buyers in this situation. Unless your company is very dependent on you, you may not be required to make much of a transition. A buyer will find it easier to run the business without you if some of your employees already have relationships with customers and know what you do.
To begin the sale process, it usually takes six to ten months on average to sell a business, so if you factor in a transition period and six to ten months on average, you may wish to begin the process at least one year before you intend to exit the business.
DO YOU KNOW HOW MUCH YOUR COMPANY IS WORTH?
After you have determined when you can begin the process of selling your company, the next question would be, how much will you be able to receive for your company? There are several reasons why this is important. As one example, you want to be confident that the proceeds from the company’s sale, in conjunction with your other assets and income, will be sufficient to support you in retirement.
What are the pros and cons of selling my business without a broker
The reason for this is that you want to have realistic expectations regarding a possible asking price and the offers you might receive for your company. There should be some room for negotiation in your asking price, but it should not be so high that you do not receive any offers for the business.
An experienced Business Broker will typically examine 3 or more years of tax returns and profit and loss statements, along with a year-to-date financial statement, to determine your potential asking price. They will also interview you to determine the strengths and weaknesses of your business. During the interview, they will inquire about your customers, products and services, employees, competitors, growth opportunities, and challenges. Using this information, they will compare it with their knowledge of the market and what other similar companies sell for and offer you a possible asking price recommendation.
It is advisable to have a business broker who does not charge an upfront fee. Consequently, you can be assured that their goals will align with yours, which is to sell the business in a timely manner and at a desirable price.
PROTECTION OF CONFIDENTIALITY
You should not disclose to your customers, suppliers, employees, and competitors that you are selling your business. You cannot prevent this from happening if you represent yourself. A business broker has been trained to protect client confidentiality.
Typically they provide a summary of your business that provides some information but does not include the name or location of the company. Prior to disclosing these details, they will have potential buyers sign a nondisclosure agreement and obtain information about their qualifications. By doing so, fewer people will be aware of the sale of the company and they will not be able to spread the word further.
Having a business that generates an annual net income between $250,000 and $7 million is a good sign that there is a large pool of potential buyers. You will be able to find buyers from private equity groups, companies in your industry and outside of your industry, and wealthy entrepreneurs. The goal is not to locate an interested party; it is to locate the right purchaser for a given company.
Top business brokers will have an integrated marketing program to generate qualified buyers and eliminate tire kickers so that sellers can focus on running their businesses and maintaining profitability. Potential buyers do not want to see businesses that have deteriorated because their owners have spent too much time speaking with buyers and trying to sell the business. In the event that you are still considering whether to sell your business yourself or through a business broker, confidentiality is a critical factor to be considered.
A BUSINESS BROKER WILL GET YOU MULTIPLE OFFERS
By introducing only qualified buyers to sellers, experienced Business Brokers will maximize the use of their clients’ time. A business broker who has spoken with thousands of potential buyers has the experience and expertise to identify which buyers are likely to be interested in purchasing a particular business. Additionally, they have considerable expertise in working with a wide range of buyers to create a bidding environment for their clients, which gives them negotiating leverage. They will assist in the negotiation of both the price and the terms and conditions of the accepted offer.
You will be able to sell your business much more quickly and at a much better price if you hire an experienced Business Broker. Business brokers who have strong relationships with banks are able to provide financing through them. Through the Broker’s banking relationships, he can assess if a particular buyer will be able to obtain funding for a particular transaction.
As you consider which offer to select, the best business brokers will assist you in determining not only which offer is the highest, but also which buyer is most likely to be able to close the deal and which deal structure would be suitable. While the business broker makes recommendations, it is ultimately up to the owner to make the final decision. Upon accepting an offer, there is still a lot of work to be done before you sit down for the closing.
DUE DILIGENCE
An experienced Business Broker can assist you through the due diligence process. Things often come up, which can lead to a transaction going in the wrong direction. Both buyers and sellers may receive differing opinions from their attorneys, accountants, family members, etc. Brokers can provide guidance and keep things on track by explaining to both parties what is normal and what is deviating from the normal.
It is common for potential buyers to be granted a period of exclusivity to perform due diligence. Whenever a buyer is dragging their feet, a Broker can leverage other potential buyers waiting in the wings to move things along or switch to another prospective buyer who is not prepared to move forward promptly.
It may be necessary to negotiate when a buyer may speak with customers or employees during due diligence. The practice usually occurs after a sale has taken place, although in some cases, a potential sale might not be disclosed to employees or customers. An investor may use this information as a reference.
A potential buyer will investigate the financial information in detail to verify the information they have been provided. In addition, they will look for potential risks, such as whether a large customer represents a significant portion of revenue and what would happen if that customer were to go away. Contracts will also be examined to see whether they are nearing expiration. Additionally, they will analyze trends to determine whether a business is trending upwards or downwards. The company will be reviewed for lawsuits and liens.
PURCHASE AGREEMENT
Negotiating a Purchase Agreement may begin immediately after an accepted offer has been made, but it is more often conducted after due diligence has been completed or at least started. Both buyer and seller will usually want to ensure that the transaction is moving forward before engaging in attorney’s fees. In cases where a buyer or seller requires a lawyer with experience in closing business sale transactions, an experienced Florida business broker can recommend attorneys they have worked within the past.
As a rule, the seller’s attorney will be the first to draft a contract based on the terms of the Letter of Intent. Occasionally, the buyer’s attorney will do so. It is typical for them to go back and forth several times to negotiate the details of a contract. Keeping things on track can be difficult if the attorneys are at a roadblock. To keep things moving forward, good relationships with all parties are necessary to resolve any differences that may arise effectively.
Following the signature of the purchase agreement, the next step would be to schedule a closing date. In advance of closing, the attorneys will ensure that any adjustments are made for bills that have not yet been paid but are accrued or vice versa. After these adjustments have been made, the closing can be scheduled. Typically, the transaction is ready to proceed at this point. In a closing, documents are signed, funds are exchanged, and information about plans for the transition is presented.
Awarded Business Broker
Hopefully, we have provided you with some additional information to answer your question: Can I sell my company myself, or should I hire a Business Broker? Could I sell my company myself, or should I hire a Business Broker? During a confidential consultation, we will discuss your specific situation and determine whether or not we can be of assistance. If you wish to avoid the problems that might arise when selling your business yourself, we can help you to maximize the sale price.
