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by Tom West
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Your best guide for buying or selling a
business isn't words on paper--it's the
competent presence of a business broker.
Although business brokers generally represent
the seller, the buyer also reaps the benefits of
expert guidance. A business broker provides
vital services for both parties and acts as the
"glue" for holding together the pieces of the
business sale process. Here's how a business
broker will work with both the buyer and the
seller:
The Business Broker and the Buyer
Business brokers prefer to talk to people in
person, and the buyer is no exception. During a
preliminary meeting in the business brokerage
office, the broker will typically ask the
prospective buyer questions such as these:
1. Do you have the necessary funds to buy a
business?
2. Is the cash readily available?
3. What is your time-frame for buying a
business?
4. What are your expectations about the purchase
of a business?
After this fact-finding meeting, the broker
can then show the buyer businesses that are both
feasible and that fit the buyer's requirements.
Further steps the broker will lead the buyer
through are as follows:
Since sellers are (rightly) concerned about
confidentiality, the broker will ask the
prospective buyer to sign a non-disclosure or
confidentiality agreement.
The broker will provide the prospective buyer
with preliminary information about one or more
businesses, including pertinent financial data.
The broker will arrange for the buyer to see
businesses of interest.
Once the buyer has indicated strong interest
in a particular business, the broker can then
supply additional information and schedule
further on-site appointments.
When the buyer is ready, the business broker
will be the best source for answering questions,
addressing concerns, resolving loose ends, and
offering a business broker's unique expertise in
the business sale transaction.
The Business Broker and the Seller: When it
comes time to sell, one of the best decisions a
business owner can make is to continue managing
his or her business efficiently (and
profitably), while depending on the services of
a business broker to orchestrate the steps of
the sale. To make the seller's job easier and
more effective, the business broker will...
Determine the right buyer for a particular
business. For locating and qualifying
prospective buyers, a business broker uses
computerized databases to access comprehensive
lists of local, national, and international
buyers--all to increase the chances of selling a
business at peak value.
Advise the seller on pricing. The business
broker is an expert in placing a realistic price
on the business and incorporating intangibles;
thus reducing the danger that every seller
fears--underpricing the business. At the same
time, the business broker can help the seller to
understand that the selling price is dictated by
the marketplace--not by a well-meaning
accountant or friend who may have an unrealistic
idea of what the business is worth.
Prepare a marketing strategy and offer advice
about essential marketing tools, such as a
business description memorandum; in fact, the
broker will help the seller in all key aspects
of presenting the business as effectively as
possible. Later, the broker can also help in the
structuring of the sale transaction.
Present offers and point out both strengths
and weaknesses. The business broker will be a
vital advisor during most stages of the
negotiation, bringing to "the table" objectivity
as well as negotiation skills developed through
years of experience in the buying and selling of
businesses.
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