BizBen.com
500 New & Refreshed Posts, Postings Daily
Over 8,000 Postings & 2,500 Resources
Assisting Buyers & Sellers Over 25 Years!

Categories

Should Owners Hire Agents To Sell Business Listings?

When the owner of a restaurant, retail store, janitorial service company or other small California business is ready to retire, it usually is a good idea to hire agents to sell business assets as part of a package that includes goodwill also called going business value.

Yes, the seller may be able to locate a buyer and conduct a sale without professional help, but because there are so many challenging problems associated with business transfers, it usually is smart to engage a business sales intermediary to launch the campaign and then manage a transaction.

Even though a hefty fee has to be paid for that service, it's almost always better to have the intermediary do the work.

The fee can total more than ten percent of the selling price. That seems very costly for many sellers. And they often fear they'll lose control of a deal if a third party is involved. But for at least seven reasons, most sellers should not trust themselves to handle the sale. Instead, they're smart to sign a listing with a competent business sales expert. Those seven benefits are:

1. Because they are in touch with many motivated buyers who are financially qualified, agents will have a bigger market of potential purchasers to draw from than will most business owners.

2. One of the biggest problems associated with trying to sell your own business is the time and risk involved in dealing with people who are curious about the business, but may not be financially able to buy it, or qualified to run it. Business sales agents and business brokers specialize in making sure the people introduced to your company have some interest and the ability to follow up with that interest.

3. When a seller hires agents to sell business assets, he or she will be able to benefit from the professionals knowledge of how to keep the intended sale a secret. It usually is important that employees and customers of a business don't know that it is for sale. The DYI (do it yourself) seller may have a difficult time, when responding to buyer inquiries and scheduling showings, trying to maintain confidentiality about the intended sale.

4. The business sales intermediary, as a third party, is usually in a better position to negotiate a deal between a seller and the buyer, than is one of the principals in the deal. Because of the seller's emotional involvement and lack of objective perspective, he or she may not be as effective as a skilled outside party at achieving an agreement that works for both sides.

5. One benefit of the experience brought to a deal by professional business brokers and agents is the knowledge about overcoming problems. There often are hurdles to overcome in California business sales. The seller, having little experience in deal making, will be less prepared and equipped to recognize and solve deal-killing problems than someone who has been doing this for a while, and earning a living at it.

6. Finding small business purchase financing has become more difficult in the past few years following the mortgage meltdown and the banking crisis. Unless a business owner knows lenders who cater to that market, such as financial institutions offering SBA loan programs, it's likely to be very difficult to know how to help a buyer who wants to borrow some of the cash for a down payment and/or working capital.   Service provided by a professional who sells businesses or arranges for business acquisition loans may be able to save a transactions that won't work unless the buyer can arrange for funding assistance.

7. One skill of a competent business sales intermediary has to do with presenting the business in an appealing way in order to get a buyer to pay the price desired by the seller. Or at least, close to that price. Not knowing how to manage competitive bidding to increase offering prices, the seller won't be able to accomplish that objective. It's not uncommon for owners who've hired agents to sell business offerings, to get a higher price than if they'd negotiated for themselves. The difference often is enough to cover the sales commission.

California business owners sometimes think they should take on the campaign of selling their businesses as a do-it-yourself project. But because they usually don't have the skill, objectivity or experience of a capable business sales intermediary, they usually improve the chances of successfully closing a deal at a desirable price when they hire a professional to manage the process.

#photo#About This Contributor: Peter Siegel, MBA is the Founder & Senior Advisor (ProBuy & ProSell Programs) at BizBen.com (established 1994, 8000+ CA businesses for sale, 500 new & refreshed postings/posts daily) works with business buyers, owners/sellers, brokers, agents, investors, & advisors). Reach him direct at 925-785-3118 to discuss strategies regarding buying, selling, (or financing a puchase of) California businesses.

Categories: BizBen Blog Contributor, Business Broker Information, How To Sell A Business, Selling A Business

Contributor:

Peter Siegel, MBA
Areas Served: Nationwide - All Areas
Phone:  925-785-3118 Cell, 925-785-3118 Text
Peter Siegel, MBA - Founder Of BizBen.com (over 25 years), I am the Lead Advisor for the ProSell, ProBuy, & ProIntermediary Programs. I advise/coach buyers, sellers, and brokers daily about buying & selling small to mid-sized businesses throughout the Nation. I can be reached direct at 925-785-3118.

Comments & Feedback From Pro Intermediaries & Pro Advisors On BizBen:

Posted By: Joe Ranieri, Business Broker: LA, Orange Counties, California    

Some sellers will say that they don't want to list, "...but if you bring me a buyer, than I will pay your commission." I try to explain to the seller that this would be like going to court as the defendant and paying the person who is suing their lawyer fees. Why would you pay someone to negotiate against you? Many sellers may have had bad experiences with brokers in the past, so it's valuable to show them all your marketing material when you go on the listing presentation, and explain the entire process of selling a business. When I talk with a prospective seller, I will also walk them through certain difficulties that may arise, and also explain that selling a business takes time and a bit of luck.


Posted By: Timothy Cunha JD, Business Broker: San Francisco Bay Area    

Of the several advantages Peter discusses, one of the most important is the professional detachment that a business broker can provide. Most business owners have an emotional attachment to their business and selling the business can often be a traumatic experience. The business broker can bring an objective perspective to the process and help the seller see the business from the viewpoint of a buyer, resulting in a more realistic understanding of the financial and economic factors being considered by the buyer. Furthermore, it is critical that the business owner not "slack off;" the business must continue to thrive until the sale transaction is complete - because nothing is final until the final closing of escrow; therefore, the seller should spend as little time as possible on selling the business and as much as possible on running the business.






Place A Posting To Sell Or Buy A Business, Search All Postings


Sell A Business Fast: Place A For Sale Posting Now To Sell A Small Business - 7 Programs To Select From >
Find A Business To Buy Fast: Place A Wanted To Buy Posting Today - Best Way To Find & Buy A Business >
Search Business For Sale & Wanted To Buy Postings On BizBen - 500 New & Refreshed Postings Daily! >

Other Related Blog Posts, Articles, And Discussions You May Be Interested In

How To Select A Business Broker Selecting A Business Broker To Sell My Business: What Should I Look For?

What should your business broker do for you to successfully sell your small to mid-sized business? Well, there's many things that a qualified business broker can and should be doing for you. Multiple ProIntermediaries and ProAdvisors give suggestions and tips to sellers in this BizBen Discussion.
Buying An Absentee Small Business The Pros And Cons Of Buying An Absentee Run Small Business In California

Peter Siegel, MBA - BizBen Founder discusses the difference between a hands on owner and an absentee owner. It covers why someone would want to be an absentee owner and then goes on to discuss the pros and cons of buying an absentee run small business in the California marketplace.
Business Brokerage Questionable Practices Sellers: Watch For These Business Broker Questionable Practices

Lee Petsas (Southern California Business Broker) shares his concerns regarding some questionable business practices by some California Business Brokers lately. Other Business Brokers and Advisors weigh in as well on this BizBen Blog post with other "dirty tricks" they have observed and heard about.
Giving Buyers Tax Returns Should Sellers Of Small Businesses Give Potential Buyers Their Tax Returns?

Should small business owners/sellers or brokers/agents give potential buyers direct access to past company tax returns and financials (profit & loss statements) either before or pre the due diligence process? Multiple ProIntermediaries and ProAdvisors discuss this topic on this BizBen Discussion.
Business Broker Likes Purchase Agreements Advantages Of An Asset Purchase Agreement (Contract) Over A Letter Of Intent

An LOI may very well be appropriate for lower middle market transactions of $5,000,000 or more; but, for deals less than that an Asset Purchase Agreement ("APA") with contingencies on the actions of the buyer (and seller) is much more efficient & effective. Tim Cunha, JD (Business Broker) explains.
Disclosures Needed For Business Buyers What Do I Need To Disclose To All Prospective Buyers Of My Small Business?

When selling a small business you always run the risk of a lawsuit. They aren't as common as one may think in this litigious world in which we live in, but whenever there is money exchanging hands & attorneys involved the stage is set for a lawsuit. Various ProIntermediaries share their viewpoints.
Keeping A Business Sale Confidential Why Is A Small Business Sale Kept Confidential? Advisors Discuss This Topic

Recently a business owner asked me on the phone, "Why do you keep the sale of a business confidential? How do you keep the sale confidential - any good tips?" Multiple Advisors weigh in on this subject. What would be your answer to this business owner? ProIntermediaries on BizBen discuss this topic.
Buying Or Starting Up Pop Up Restaurants Pop-Up Restaurants: Pro Tips For Starting Or Buying One: Broker Shares Info

For starters, a pop-up restaurant is a short-lived dining experience in a temporary location, most found in abandoned factories or warehouses, rooftops, barns, or an already existing restaurant location, so basically anywhere done legally and safely. Joe Ranieri, Business Broker shares his tips.
Selling A Business 13 Crucial Tips Selling A Small To Mid-Sized Business: 13 Crucial Items To Sell A Business

Only 30% of all small businesses for sale that are put on the market overall are sold! A surprising statistic to most business owners, agents, and brokers trying to sell a small business! If however you follow the strategies (BizBen Protocol Method) in this blog post you should see success!
Chuck Posts New Laundry Book Chuck Post, Laundry Pro Offers New Laundromat Book For Buyers And Owners

Chuck Post, a leading laundry expert with over 37 years of developing laundries, retooling, and rebranding hundreds of existing laundries, tells investors how to search, find, evaluate, and do good laundry due diligence laundries for acquisition. A must read for new investors & current operators.