Why go through a business broker when purchasing an existing business? The benefits to using a professional brokerage firm when acquiring a business are many and not all may have occurred to you. While it is true that business brokers generally work for the seller after all, the seller pays their commission the services they provide to the buyer are highly valuable before, during and after the buying process. Besides, business brokers are largely honest folks who like to oversee deals that are a win-win for both parties.
1. Business Listings: Brokers have a list of businesses that are actively for sale including all the necessary details to help you determine if you are interested. In addition, business brokers know current market conditions and have valuable information on business financing should you require it. They will also have an idea of whether the seller is willing to finance part of the purchase.
2. Intermediary Role: Purchasing a business involves a degree of negotiation and back and forth communication. Sometimes personalities can interfere with the process, despite the fact that it is a business transaction. A business broker provides the conduit for communication between a buyer and seller to help keep the flow of communication and information open. There are always unanticipated bumps in the road when purchasing an existing business that can spark a range of emotions. Since you may need to communicate with the current owner down the road during the transition or for information, it is best to remain as neutral as possible in the process.
3. The Paperwork: Even with a team of professionals including an accountant and attorney, the purchase of a business will generate a great deal of paperwork. Prior to the acquisition, you will want to assess the revenue history and expenditures of the business to be sure that the future profits are worth the venture. Inventory lists, policy manuals, relevant licensing information, title clearance, taken together with closing documents and more, means you will have an enormous amount of information to keep track of. A broker will already have a portfolio containing much of the information you will need and is perfectly situated to obtain additional documentation that you may require.
4. The Offer: Because the business broker has a deep understanding of the business for sale, he or she can help you structure your offer in such a way that it is more likely to be accepted. Additional negotiation to reach an agreement may be necessary and the broker will serve as the most effective mediator for that process. The broker can also assist your accountant and attorney with any questions they may have in completing due diligence.
5. In Closing: Once an agreement is reached, the business brokerage will guide you through the final documentation process as well as facilitate the transition from the seller to the buyer.
Buying an existing business is an exciting prospect. Make sure you receive the experience and assistance to help keep the process a positive experience by working with a competent business broker.