Should I Sell My Business Myself Or Hire A Business Broker?

Should I Sell My Business Myself Or Hire A Business Broker?

This is a question most business owners ask themselves –  should they sell their business themselves, or hire a professional business broker.

We were recently contacted by an owner who was concerned about confidentiality, and who wanted to save on commission fees. So he decided to try to sell his business himself. After eight unsuccessful months, he came to the Benjamin Ross Group. During that period, two deals fell apart, confidentiality went out the door, as did a long-term employee.

In many cases, the business for sale represents the seller’s life work. Selling it can be a long, tedious and stressful process; there are hundreds of variables involved. Although it is possible to deal with them, there’s no question that they’ll distract the seller from the day-to-day operation of the business.

The best way to achieve a successful sale for a good price is to put together a good team.  This should consist of an experienced business broker, a trusted attorney, and the business’s CPA. The owner can then concentrate on keeping the business strong with an expectation of getting the best possible sale price.

As we worked toward the sale of our client’s business, we were able to prove to him why working with an experienced business broker can pay huge dividends:

1. Confidentiality

We were able to protect the identity of the company and preserve confidentiality. As a result, there were no worries for employees, customers, suppliers and bankers. Competitors didn’t know about it, and therefore couldn’t act to hinder the deal and possibly make a killing for themselves.

2. Business Continuity

When our client tried to sell his business by himself, he had less time to devote to his business. He was running the risk of damaging the enterprise. After we were engaged, the owner was able to focus on what he does best while we focused on the sale process.

3. Marketing

An experienced and professional business broker will have the tools and resources to reach the largest possible base of buyers. We screen these potential buyers and confirm that they have the financial resources to support the potential acquisition. We understand the key values buyers are looking for, and in this case, we presented those values which maximized the sale price.

4. Valuing the Business

When our client tried to sell his business on his own, he based the value of the enterprise on two things: what he needed for retirement, and his “sweat equity.” Setting a value for a business is much more complex than that; hundreds of variables have to be taken into consideration. After we did our own independent valuation of the business, the client was pleasantly surprised. His business was worth more than he expected.  Business brokers have access to business transaction databases that can be used as guidelines or reference points. This research helps us to understand the market and obtain a fair value for the business. It also helps in setting up financing, a key element in a successful transaction.

5. Experience

Because we have facilitated hundreds of business sales, we were able to understand the financial and legal aspects of the company, as well as its operations. We guided our client to help make the company more salable. As professional negotiators, we know how to overcome the many obstacles that may prevent a deal from closing. We kept personal emotions out of the negotiations, keeping the talks focused on the essentials, and we leveraged our experience to help our client receive the best possible price and terms for his company. Additionally, we kept the deal on track ensuring that all parties met the necessary deadlines–a key contributor to a successful sale, as time kills deals.

6. Closing the Deal

Since the business broker’s sole function is to get the deal to the closing table, there’s a much better chance that a deal will be closed in a shorter time. That means less risk of problems with employees, customers, suppliers and predatory competition.

At the closing table, our client said he will never begrudge paying a good professional again.

So if you are trying to decide whether to sell your business yourself or hire a professional, ask yourself this question: Do I really have the time to operate the business, compile marketing materials, advertise, screen buyers, provide facility tours, facilitate due diligence, arrange financing, risk losing clients and employees? When you’re considering selling, you want to put even greater emphasis on running your business, boosting your sales and not taking on new responsibilities.

Missteps in mergers and acquisitions can be costly and time-consuming because of the intricacy of the process. Sellers leave so much on the table by not securing the optimal price for their businesses. Company owners are usually high-net-worth individuals and are not trained in deal structuring. They are not aware of the countless options that can make a deal succeed.

So ask yourself another question: am I likely to have more money in my pocket after a sale by using a broker, as opposed to going it alone and possibly making a big mistake?

Feel free to download our Whitepaper which discusses popular options for selling a business.

If you need help putting together a strategic plan, please contact the Benjamin Ross Group at 215-357-9694 to speak with a professional business broker who can help you start the process.