Warning: A Business Intermediary Will Work Hard To Conclude The Sale Of Your business, But May Be More Interested In It Closing, Than In Getting You The Best Price.
Like most people paid a success fee, a business intermediary owes his greatest loyalty to the success fee. That means that he is not necessarily working in your best interest. Rather than working hard to get your price, he may work hard to convince you to take the price offered. But this will only happen if you permit it to happen.
Your job is to select the appropriate business intermediary, and to manage his activities, rather than letting him manage yours. And to have prepared your business for sale so well, that there is little uncertainty surrounding the worth of your business. Including employing a well respected
. As part of your management of his activities, you should be regularly apprised of his marketing efforts. And be prepared to provide guidance should he stray in an unproductive direction.
The term business intermediary includes people who are professional business brokers. They are mostly people specializing in helping you and others like you, sell your business. They are not usually residential real estate brokers trying to augment their own businesses by selling something else. Those really in residential real estate will likely be ill equipped to handle the sale of your business, so should be avoided. Good professional business brokers specialize in selling businesses.
A small business broker is another category of business intermediary. He may be different from professional business brokers in that he usually deals in lower priced businesses. He may be handling convenience stores, service stations, etc. And if that is the type of business you have, then he would be the appropriate person to have represent your business. His activities are most likely to result in advertising in the local newspaper. He wants people buying a business, or wishing to buy a business.
Another category of business intermediary is a business acquisitions specialist. This person will usually deal in businesses with higher prices, and with some degree of specialization or differentiation. He can be expected to take a highly targeted approach, and in fact, may be acting for someone seeking a particular type of business. Both he and the buyers he will introduce, can be expected to be more sophisticated in business.
This is not an exhaustive listing of people in the business intermediary profession. It is intended to highlight the most common participants. Some may be compensated purely based on a success fee. Others may ask for an engagement fee, supplemented by a success fee. However, there will be a going rate for contingent compensation for business sales in your industry, and your area of the country. Regardless of how it is structured, you will not usually want to exceed that amount.
At the risk of being repetitive, when seeking an intermediary or broker, get the best you can find. Look into the background of those offering to assist. How does their experience relate to the task at hand. Someone used to selling convenience stores may not do so well representing a $5 million manufacturing business. Of even greater importance is character. Remember the age old question about whether you would buy a used car from this man. He will likely be the first person a prospective buyer encounters.
One place to start when seeking an intermediary is with your business valuator. He is likely to have experience with many intermediaries, and will know how they operate. He may be able to refer you to one that will work well for you. And if not him, then your attorney or accountant may be helpful.
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