According to the Small Business Administration (SBA), most manufacturing companies with 500 or fewer employees, and most non-manufacturing companies with average annual receipts of less than $7.5 million, are considered small businesses. According to the SBA by 2020 there were 31.7 million small businesses operating in the United States.
As we can see, the market for the sale of small companies is broad and dynamic to the point that it is estimated that around 30% of this vast universe is always in the process of being sold. It is in this market that most business brokers carry out their intermediation activity between buyers and sellers.
If you have thought about buying or selling a business, it is important that you evaluate the possibility of relying on the services of a business broker to minimize the risk of your operation. As in all professions, each business broker has its own profile based on its experience, specialty, and the work methods it uses.
In any case, there are seven common elements to who should be a good business broker that I allow myself to summarize below:
- Specialization. When a business owner hires a business broker, he must have the peace of mind that he will be able to dedicate the bulk of his time to continue operating his firm. The broker, for its part, must be in charge of a) Placing the company for sale in the Market; b) Interview and screen potential buyers to ensure they have the necessary financial resources and managerial capacity; c) Advise the parties in all stages of the process: Option, Analysis Period, Documentation and Closing.
- Confidentiality: This is, perhaps, the main difference between someone who sells real estate and someone who sells a business. The business broker must know how to maintain the confidentiality of his mission and take safeguards so that neither the employees, nor the suppliers, nor the competitors, nor the clients find out that the process of selling the business is underway.
- Assessment. An experienced broker should be able to express an opinion of the value of the company that serves to approximate a sale price, which is in line with the aspirations of the seller and with the tolerance of the market.
- Business Listings. Business brokers must be subscribed to multiple-listing systems where the businesses that their colleagues have for sale are also published. Thus, when you hire a business broker you will be getting the support of a large sales force linked to the Florida Business Brokers Association (BBF).
- Wide Exposure. Business brokers often have affiliation with specialized websites where they can advertise the companies they have for sale. Thus, the businesses for sale will have worldwide exposure, via the Internet.
- Intermediation. The business broker must serve as an articulation between the buyer and the seller and act as a transaction agent that seeks to harmonize the wishes of both parties.
- Documentation. The business broker must be in charge of coordinating with the parties all the steps of the process of analyzing the accounting and administrative books; The lease; licenses and permits and other paperwork. It will also coordinate with the closing agent the documentation related to the transfer of business assets to the buyer during the closing process of the sale.
If by now you are convinced of the convenience of hiring a business broker, remember the phrase of Animal Farm, Orwell's famous satirical novel: “All animals are equal, but some animals are more equal than others “. That is why it is good to take into account the following tips:
- Ask for references.
- Check your reputation with professional associations.
- Examine the credentials.
- Find a specialist.
- Demand confidentiality.
- Know the marketing plan.
- Check the commission amount.
- Do not accept pressure.
Although the business broker will advise you during the process of selling your business, the seller will always be you. Therefore, it will be up to you to have updated accounting books, machinery and equipment in perfect condition, properly trained personnel, and up-to-date accounts payable.
The sale of the business will come to a happy ending if the buyer's analysis process is carried out on the basis of order, transparency and seriousness on the part of the seller.
Alfredo Gonzalez Amare