Savvy Buyers Level Their Playing Field
The most valuable brokers for sellers are the best at creating business buyer competition.
The smartest owners will seek out those brokers, and verify their ability to cause buyers to bid against one another.
All the other bells and whistles that business brokers pitch to perspective listings won’t make much of a difference other than to be pretty wallpaper on business offerings that languish for sale.
Buyer competition is the secret sauce.
The advantages that brokers convey to sellers are why savvy buyers contact our Business Buyer Advocates ® to level their dealmaking playing field and to help facilitate win-win done deals.
According to our poll, conducted in the USA, Canada and the United Kingdom (plus a few contributors from around the world), there are 62 reasons why sellers of small and midsize businesses hire business transfer intermediaries (i.e., business brokers and advisors who specialize in dealmaking on behalf of sellers).
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The top reasons sellers hire brokers:
- Brokers know how to sell businesses; most sellers don’t 24%
- Seller doesn’t want to be distracted from running business 16%
- Confidentiality preservation and knowledge of what/when to show buyers 14%
- Access broker’s database of potential buyers and investors 13%
- Maximize price buyers will pay for the business 9%
- Owner does not know how to find buyers 8%
- Prepare owner to sell and prepare business for sale 5%
- Broker understands and can depersonalize negotiations 5%
- Explain and handhold seller throughout selling process 2%
- Owner afraid of trying to sell by-owner 2%
- Help buyer obtain financing 2%
All 62 reasons:
- Access broker’s or an advisor’s database of potential buyers and investors
- Advertising run and paid by broker
- Affiliated brokerage or advisory offices may attract more buyers
- Assistance during escrow closing
- Background check on potential buyers run by broker or advisor
- Broker or advisor can confer with seller, legal and tax counsel about terms of sale
- Broker or advisor understands and can depersonalize negotiations
- Brokers and advisors enable buyers and sellers to access a broader pool of potential partners
- Brokers and advisors have broader third-party prospective from done deals and failed deals
- Brokers and some advisors know how to sell businesses; most sellers don’t
- Business advice re contracts (exclusive of legal advice)
- Buyer competition: Create and manage it
- Coach sellers to answer buyers’ questions and concerns
- Compensation basis is commission upon sale or partially contingent upon done deal
- Compile necessary information about the business
- Confidentiality preservation and knowledge of what/when to show buyers
- Continual followup with buyers for decisions
- Control buyers: Brokers and some advisors know what is appropriate and inappropriate
- Dealmaking team: Referral to accountants, appraisers, brokers and lawyers
- Deals almost die numerous times; Brokers and some advisors know how to revive them
- Define best probable price and terms before going to market
- Determine best offer price
- Determine best selling price
- Determine best time to offer business for sale
- Develop marketing strategy and plan its implementation
- Disclose, to buyers, sensitive information about the business
- Explain and handhold seller throughout selling process
- Financial analysis and recasting by broker or advisor
- Help buyer obtain financing
- Initiate contact with likely purchasers
- Intermediary can speak for the seller
- Maximize price buyers will pay for the business
- Mediate and negotiate with buyers
- Minimize interference with seller’s management of company
- Most buyers start with business brokers and Internet searches
- Negotiating strategy
- Owner afraid of trying to sell by-owner
- Owner does not have relevant capability to sell by-owner
- Owner does not have time to try to sell by-owner
- Owner does not know how to find buyers
- Owner doesn’t know the probable price buyers will pay
- Owner needs quick sale due to pressing crisis
- Owner referred to broker or advisor by happy seller
- Prepare owner to sell and prepare business for sale
- Prepare two versions of the business profile (teaser and full)
- Professional advisor recommends owner hire broker or advisor
- Qualify and screen buyers
- Receive, present and help evaluate purchase offers
- Reconcile differences between tax returns and financial statements
- Reduce frustration during offering and sales process
- Seeing the business from the perspective of buyers
- Seller does not have a network of contacts with access to buyers
- Seller does not understand the implications between strategic and financial buyers
- Seller doesn’t want to be distracted from running business
- Seller fears adverse effect if premature disclosure (about sale) to key employees and lenders
- Showcase the seller’s business to buyers
- Time savings broker or advisor provides sellers
- Understands local marketplace of businesses for sale
- Understands seller’s industry
- Unsolicited offer from a buyer requires expert help
- Using broker is the only way sellers know about
- Wants to get the highest price
Business brokers: You are welcome to copy and publish the 62 reasons if you include this title: 62 Reasons for Business Sellers Hiring Brokers.
You must attribute the author this way:
Copyright 2011 Ted J. Leverette, The Original Business Buyer Advocate ®, “Partner” On-Call Network LLC.
Permission was granted to reproduce this report.
“Partner” On-Call Network LLC is not a business brokerage; we don’t list businesses for sale and then take them to market; independent users of our information might be. We collaborate with and recommend (but not from this website) the best brokers, even brokers not a member of our network. Hundreds of brokers use our books, among other resources, to achieve done deals. And some brokers refer clients to us.
Before you hire a business broker or exit planner,
or before you deploy their recommendations . . .
Sign up for our Business Seller Training. Doing so will equip you with insight and tools that are not available from any other kind of advisor. We’ll tell you more about your alternatives, what you must know before and after putting your business on the market, and perhaps most importantly what you need to know and do now for after the sale of your company.
This training will make it easier for your business broker and/or exit planner to help you achieve the result you want. And if you want to try selling by-owner you absolutely need this training; there are just too many mistakes you don’t know you don’t know about and most of them will increase your risk and adversely affect the sale of your company.
Learn how to sell your business the right way, in a live, one-on-one teleconference, with a Business Buyer Advocate ®.
Because if you don’t know how buyers will perceive you and your company and what they intend to do to you during due diligence and dealmaking, you are in for a big surprise.
Improve your search and dealmaking:
Schedule an hour of coaching with Ted Leverette, The Original Business Buyer Advocate ®
Email Ted J. Leverette, The Original Business Buyer Advocate ® Since the 1970s. “Partner” On-Call Network, LLC