The journey of selling your business starts with the decision of whether or not to engage a business broker’s services or to go proceed down the path of the sale process independently. This correct choice is going to be different depending on each seller’s unique circumstances and preferences and skills. Let’s explore the key points associated with each approach as well as some questions to ask yourself that will help you come up with what’s most suitable for you.
Choosing a Business Broker: Harnessing Professional Expertise
Expert Guidance for Maximising Value
A professional broker working for a large brokerage has an advantage of having access to hundreds of recent comparable business sales which gives a valuable insight in helping understand current market conditions. This, combined with their experience in actually selling businesses, also gives them an advantage in the preparing, correctly valuing, and positioning a business to attract the right buyers. They can also leverage a network of potential buyers to ensure a business that is for sale is seen by the right eyes, often justifying their commission through a higher final sale price and a smoother sales process.
Confidential Marketing and Preserving Stability
One of the advantages of working with a broker is their ability to discreetly market a business, highlighting the business’s strengths while keeping its identity confidential until necessary. This approach can be critical for maintaining operational stability, safeguarding employee morale, and preventing competitors from exploiting the sale situation.
Handling Negotiations and The Parties Involved, Reducing Stress
The complexity of organising accountants and lawyers on all sides of the deal, negotiations and the sheer volume of paperwork in a business sale can be overwhelming for the uninitiated. Brokers bring to the table their expertise and experience in all these areas, significantly enhancing the chances of a smooth, successful sale. They handle the administrative burden, ensuring legal and financial documents are accurately prepared and submitted. This support allows you to focus on running your business, reducing stress and workload during the sales process.
The Financial Equation of Broker Commissions
Although brokers charge a commission, their involvement often leads to a higher sale price. This is achieved through their strategic marketing, skilled negotiations, and precise business valuation, which can collectively offset the cost of their fees. On top of that, the efficiency and peace of mind they offer throughout the process can be invaluable, especially for business owners looking to minimise disruption to their ongoing operations.
Selling Your Business Yourself: The DIY Approach
Full Control and Direct Engagement
Opting to sell your business on your own grants you complete control over every aspect of the sales process, from determining the asking price to negotiating sale terms. This direct control can be appealing, especially if you have specific ideas about how to market your business or if you wish to avoid broker fees.
Market Understanding and Personal Involvement
Selling your business independently requires a significant commitment to understanding the current market, including buyer trends and business valuations as well as marketing, negotiating and selling. While this approach demands more personal involvement, it also offers a greater understanding of the selling process and the satisfaction of managing the sale firsthand.
The Challenges of Access and Confidentiality
One of the most significant challenges of selling your business yourself is accessing a broad pool of potential buyers while maintaining confidentiality. Without a third party to act as an intermediary, or a network and resources that a broker has, reaching interested parties and vetting them can be more difficult. Additionally, marketing your business without revealing sensitive information requires careful planning and strategy.
Making the Decision: Factors to Consider
Complexity of Your Business
The complexity of your business can significantly influence whether a broker’s expertise is necessary. Larger businesses with intricate operations, diverse product lines and offerings, or specific industry regulations may benefit from the specialised knowledge and experience a broker brings.
Whereas simple self employed business owners might be more suitable for selling themselves.
Personal Experience and Time And Stress Capacity
Your background in sales, marketing, and negotiation plays a crucial role in determining your ability to handle the sale. Additionally, selling a business is a time-intensive and sometimes stressful process that can detract from running the business itself. Assessing your capacity to handle the extra stress and time requirements while running your existing business is an important factor to consider
Emotional Attachment
The emotional aspect of selling a business is often overlooked. Owners often have deep attachments to their businesses, rightfully so, which can cloud judgment during negotiations, potentially leading to a lost sale and overall lower sale price in the end. A broker acting as an objective third party can provide sometimes-needed clear perspective, potentially leading to better decision-making and outcomes.
In summary, the decision to use a business broker or sell your business yourself involves careful consideration of your personal goals, experience, how much time you can dedicate, the stress you want to take on, the complexity of your business, and the level of control you desire over the sale process. Regardless of the path chosen, understanding these factors will help ensure a smoother and more successful sale.
If you think that engaging a broker might be the correct decision for your business, give us a call on 1300 405 597 or email at kurt@newchapterbusinesssales.com.au to have a conversation about what the next steps would look like.