Are Business Brokers Worth It | 5 Benefits Working With a Broker
September 20, 2022
by 
Andrew Rogerson
in Management and Planning, Selling your business
Are business brokers worth it? If you are looking to sell your business in California, here are 5 benefits of working with a broker.
- Get The Best Price For Your Business
- Find The Right Buyer
- Get The Benefits Of Managing The Sell-Side Process
- Get All The Paperwork & Financials In Ship Shape
- Get Advice & Guidance During The Sale Process Of Your Business
If you’re a business owner, you’ve probably thought about retirement at some point. And if you’re a retiring baby boomer, you may be looking to sell your business. In either case, working with a business broker can be extremely beneficial.
Here’s why.
Get the best price for your business
One of the main benefits of working with a business broker is that they can help you get the best price for your business. This is because they have a lot of experience in negotiating deals and they understand the market well. They will also be able to provide you with advice on how to position your business to make it more attractive to buyers.
For example, if you own a business in California that you’re looking to sell, a business broker can help you understand what buyers are willing to pay for businesses like yours in the current market.
Let’s say you are looking to sell your business for $1 million, a business broker can help you understand how to structure the deal so that you get the most money from the sale.
A business broker can also help you understand how to calculate the price of your business. This is important because you want to make sure that you’re not leaving money on the table by selling for too little, but you also don’t want to price yourself out of the market.
The first step in calculating the price of your business is to determine the fair market value. This can be done by looking at recent sales of similar businesses in your area.
After you have determined the fair market value of your business, you will need to calculate the seller’s discretionary earnings (SDE). This is important because it is the number that buyers will use to determine how much they are willing to pay for your business.
The SDE is calculated by adding up the net income, depreciation, and amortization, and then adding back in any owner’s salary, benefits, and expenses.
For example, let’s say that your business had a net income of $100,000 last year. Depreciation and amortization totaled $10,000. And your salary, benefits, and expenses totaled $50,000. The SDE would be $100,000 + $10,000 + $50,000, which equals $160,000.
The SDE is a very important number because it is used to determine the multiple that buyers are willing to pay for your business. For example, if buyers in your industry are willing to pay a multiple of 2.5 times SDE, then your business would be worth $400,000 (2.5 x $160,000).
A business broker can help you understand what multiple buyers are willing to pay for businesses in your industry. They can also help you negotiate a higher price by showing buyers how your business compares to others in the industry.
Find the right buyer
Another benefit of working with a business broker is that they can help you find the right buyer for your business. This is important because you want to make sure that your business goes to someone who will be able to take it to the next level.
A business broker will have a network of potential buyers that they can reach out to on your behalf. They will also be able to screen buyers to make sure that they are a good fit for your business.
For example, if you own a small manufacturing business, you may not want to sell it to a large corporation because they may not be interested in keeping the manufacturing operations in your town.
A business broker can help you find a buyer who is interested in keeping the business in its current location and who has the resources to grow the business.
Manage the process
Another benefit of working with a business broker is that they can help you manage the entire selling process. This is important because selling a business is a complex process with a lot of moving parts.
A business broker can help you coordinate the different aspects of the sale, such as due diligence, financing, and closing. They can also help you manage the expectations of both buyers and sellers to make sure that everyone is on the same page.
Selling a business is a big decision, and it’s not something that you should do on your own. A business broker can help you navigate the process and get the best possible outcome for your business.
Sell-side due diligence
Due diligence is an important part of the selling process because it helps to protect the seller from liability and ensures that the buyer is getting what they expect.
There are many different types of due diligence, but one of the most important for sellers is sell-side due diligence. This is where the seller provides information about the business to the buyer so that the buyer can make an informed decision about whether or not to purchase the business.
Sell-side due diligence typically includes financial information, such as income statements, balance sheets, and tax returns. It also includes information about the business itself, such as the products and services it offers, its competitive landscape, and its growth potential.
Sellers should provide as much information as possible to the buyer during due diligence so that the buyer can make an informed decision. It is also important for sellers to keep track of all the information they provide to the buyer so that they can protect themselves from liability in case something goes wrong after the sale.
Paperwork and legalities involved in selling a business
A business broker can help you with the paperwork and legalities involved in selling a business. This includes preparing and filing the necessary paperwork, as well as working with the buyer to ensure a smooth transition.
Some of the documents that may need to be completed and filed include:
- Sales Agreement
- Purchase Agreement
- Disclosure Statement
- Operating Agreement
- Tax Paperwork
Some of the financial documents that may need to be completed and filed include:
- Profit and Loss Statement
- Balance Sheet
- Tax Return
The business broker will also work with the buyer to help them understand the business and what they need to do to take over. This includes providing information on the employees, customers, suppliers, and any other important facets of the business. The goal is to make sure the buyer is prepared to take over the business and that the transition is as smooth as possible.
If you are selling your business, a business broker can be a valuable asset in helping you through the process. They can help you with the paperwork and legalities, as well as work with the buyer to ensure a smooth transition.
A business broker can provide valuable advice and guidance throughout the process of selling a business
A business broker can provide valuable advice and guidance throughout the process of selling a business. This is especially true for those who are not familiar with the process of selling a business. A business broker can help to determine a fair price for the business, as well as negotiate on behalf of the seller. Additionally, a business broker can provide advice on the best way to market the business and can help to find potential buyers.
Write about a list of the 10 best pieces of advice a business broker can give to a retiring business owner looking to sell their business
1. Don’t underestimate the value of your business – A business broker can help you to establish a realistic asking price for your business, based on its current value and future potential.
2. Get your ducks in a row – Before putting your business on the market, make sure that all legal and financial documentation is in order. This will make the sale process much smoother.
3. Choose the right time to sell – Timing is everything when it comes to selling a business. You need to ensure that you are ready, both emotionally and financially, to take this step.
4. Don’t do it alone – A business broker can be a valuable ally in the sale of your business, providing advice, guidance, and support throughout the process.
5. Know your buyer – It is important to have a good understanding of who your potential buyers might be so that you can tailor your marketing strategy accordingly.
6. Get expert help – When selling a business, it is essential to seek out professional advice from solicitors, accountants, and business brokers.
7. Don’t be afraid to negotiate – Never accept the first offer that comes in – remember, you are in the driving seat and can set the terms of the sale.
8. Be prepared to walk away – If a prospective buyer is not meeting your expectations, don’t be afraid to walk away from the deal.
9. Be honest – Be upfront about any issues or challenges that your business is facing. Honesty is the best policy when selling a business.
10. Have realistic expectations – Selling a business can be a lengthy and complex process, so it’s important to have realistic expectations from the outset.
If you’re thinking about retirement or selling your business, working with a broker is a great option. They will help you navigate the process from start to finish and ensure that you get the best possible price for your business. So if you’re ready to take the next step, contact a broker today.
Hire a California Certified Broker to Sell my Business
When deciding to sell your business in California, you will likely go through several questions in your mind. Here are just a handful of many other questions that comes to mind.
- What is the value of your business?
- What should be the price at which you sell it?
- How can you find a buyer?
- How can you find a buyer who is interested in buying your business?
The answers to these questions will largely depend on the experience and network of contacts of your chosen business broker in California that focus on a geographic location by region:
Northern California
City Population
.Source: Wikipedia
Central Valley California
| SMSA | Population |
|---|---|
| Sacramento Metropolitan Area | 2,527,123 |
| Fresno Metropolitan Area | 930,450 |
| Bakersfield Metropolitan Area | 839,361 |
| Stockton Metropolitan Area | 696,214 |
| Modesto Metropolitan Area | 518,522 |
| Visalia–Porterville Metropolitan Area | 449,253 |
| Merced Metropolitan Area | 259,898 |
| Chico Metropolitan Area | 220,266 |
| Redding Metropolitan Area | 177,774 |
| Yuba City Metropolitan Area | 167,497 |
| Hanford–Corcoran Metropolitan Area | 153,765 |
| Madera Metropolitan Area | 152,925 |
| Red Bluff Micropolitan Area | 63,601 |
Source: Wikipedia
So, choose wisely a qualified business broker near you to sell your business in California.
Conclusion
Selling your business is a life-changing event. That’s why it’s essential to plan for this event carefully.
If you’relisting a business for sale in California, you’ll want to find a reliable business brokerage firm. AtRogerson Business Servicesa team of experienced professionals works to plan and carry out the buying and selling business process in California.
You can alsoconsult withAndrew Rogersonon how to increase your overall value.
You might want to read further theSix Steps to Successfully Sell or Exit your Medical Practice in California
List of Resources That You Might Find Helpful
- Selling your business
- Get started on aseven-step process of selling my business.
- Get a business valuation
- Get started on aseven-step process of valuing my business.
- Selling your medical practice
- How to value your medical practice equipment
- Selling your manufacturing business
- Valuing a manufacturing business by using the asset calculation method
- Selling wholesale distribution business
- Best calculations:How to value a wholesale distribution business
- Selling a professional services company or firm
- How to value a professional service firm based on income calculations
- Selling a construction company
- How to value a construction company
- Selling a trucking company
- EBITDA multiples for a trucking company| best calculations
- How to value a logistics company| find a company worth
- Selling an IT Services Company
- Sell my managed security service provider business for the maximum price
- Sell my managed cloud service provider business | maximize its value
- MSP valuation multiples | what is my business worth
Final Take: Broker to Sell My Business
While we’ve presented plenty of helpful tips on how to sell your small business in California, contacting a business broker near you, or preparing a business exit strategy can be the difference between selling your small business and almost selling your small business.
It is estimated that only 25% of privately held small businesses actually sell. Increase your odds by getting a professional business broker to assist you.
Mainstreet businesses simply refer to a smaller company considering selling or exiting their business. Examples of amain street business exit planninginclude:
- The seller looking to retire or move into another venture.
- Several buyers may bid against each other, elevating your business’ value.
- You’re more likely to negotiate a higher price when you sell to a competitor as opposed to an outside party.
Additionally, using a Mainstreet business broker can help give you a competitive edge in the market and eliminate or reduce friction points or roadblocks in the selling process.
Is your business worth $3 million and above? See how to exit/sell a business in the lower middle market category.
Considering an exit strategy for your small business,let’s get in touchand we’ll walk you through the process by kick-starting abusiness valuation.
If you are considering valuing and selling your business or medical practice within six to twelve months, giveAndrew Rogerson, a certified business broker based in Sacramento, California, aCall Toll-Free at (844) 414-9700 or email him atsupport@rogersonbusinessservices.comservices the whole state of California.
What is a business broker is part of the tips for hiring a business brokerin Californiaseries->
September 21, 2022
