When you sell your business, it can be difficult to know whether or not you should use a broker. While some businesses have many benefits of using brokers, there are also some reasons why you shouldn’t use a broker when selling your business. This article will list 20 reasons that may help you decide if using a broker is right for your business.
1. If you want to get the highest price possible for your business, hiring a broker is not always the best choice. Brokers can help you make transactions more efficient and they may be able to help negotiate deals with buyers. However, when it comes down to actually selling your business, brokers often cannot sell a business for any higher than it would command in the open market.
2. Brokers are expensive . You will not only have to pay the broker a sales commission, but you’ll also be required to pay your share of their marketing costs. Brokers generally take between 3% and 6% of the total sale price as their sales commission plus an additional percentage for their marketing expenses. That means paying upwards of 7-10% of your business’s sale price in commissions, which might not even get you any buyers!
3. A broker must make money on every transaction they work on, which can lead to some shady behavior if they do not think it is worth their time or effort to work on your deal. This may include makinglow-ball” offers to buyers or even telling them about other companies they may be interested in buying.
4. A broker’s main objective is to make a deal happen quickly . If they can’t accomplish this for you, they may not want to work with you anymore. This means that their ability to negotiate on your behalf will likely drop significantly if the negotiations are taking too long or are too difficult. Basically, brokers are there to do all of the hard work with buyers so that you don’t have toand once they’re done, they usually move on without looking back!
5. Many brokers treat their business-owner clients as passive sellers who are simply waiting around for offers rather than working towards building relationships and driving real buyer interest. They tend to spend more time marketing to buyers than working on your business’s value.
6. Many brokers are over-worked and over-stressed, which can lead to sloppy mistakes made by the broker that may cause you to end up with a poor deal or an unsuccessful sale of your company.
7. Brokers don’t really know what they are doing until they have done it before . This means that there is no way for you to know whether or not they truly understand how to sell your specific type of business. Most businesses are too complicated for someone who has never worked with them before to be able to effectively evaluate their fair market value, which will make it difficult for them to help you sell it at the best price possible.
8. Even if you are using a broker who specializes in your type of business, they may not really understand the industry that you are working with. Vendors frequently sell their businesses before they fail on purpose because it is much easier to sell an existing company than it is to build one from scratch. Most buyers don’t want to take the risk of buying a business that will lose them money over time because these types of businesses can be difficult to manage and keep afloat if there are any hidden liabilities or other problems involved.
9. If you use a broker, you won’t get as much personalized attention as you would if you sold your business yourself. Using a broker means that there is usually only one point person handling all of your incoming communications, requests for information and other needs, which means that you won’t get to work with as many different professionals and receive advice from as many different experts throughout the process.
10. Selling a business through a broker often takes much longer than selling it by yourself . This could easily cost you money due to lost revenue or help bring about other financial problems that you didn’t have before. Not only will it take longer for your business to sell if you use a broker but it will also be difficult for buyers to evaluate what they are getting until they sign an offer and officially want to purchase your company. Unfortunately, this means that you will likely spend more time worrying about whether or not your business is going to sell, then actually working on improving the value of your business!
11. There are no guarantees in life, especially in the business world . Although brokers who specialize in your type of business will be able to sell it faster than you can on your own, there is no way for them to guarantee that they will be able to do this for you. There are simply too many factors affecting the overall value of your company for anyone to tell you with 100% certainty that they are going to be successful at selling it.
12. It is difficult for most businessmen and businesswomen to step aside completely once a broker has started working on their deal . This means that if something goes wrong or an issue arises during negotiations, your primary point person may not have enough information about what is really happening internally within your organization in order to adjust quickly and properly.
13. Once a broker has been brought into the process, it is difficult to go back and start over again . This means that if you change your mind or realize that you would rather sell your business by yourself, you won’t have enough time left to restart the process from scratch with a different broker. The most likely outcome in this situation is going to be accepting lower offers from buyers or having an unsuccessful sale of your company because time ran out before proposals were received from qualified bidders who were willing to pay what you truly wanted for your business.
14. If a broker makes any mistakes when they are working on selling your company, they may end up costing you money . This could happen when a broker makes it possible for your business to sell for less than what you would have normally gotten because of their lack or experience, lack of knowledge about the industry that they are working in or some other mistake.
15. Brokers are designed to be used when you just want to sell your business quickly . Unfortunately, most brokers don’t know how to help you sell a business that is only worth $100,000 or so if it doesn’t have any major assets involved. Even if the value is much higher than this, chances are good that you will need more assistance from an expert who can provide different strategies for promoting and selling your company at its best possible price.
16. Selling through a broker means accepting offers happen to come in . Many brokers receive dozens of offers every week and if they don’t feel like you will accept them for any reason, there is little chance that your company will ever sell even after years of having it listed with the same person.
17. Agents who specialize in selling small companies usually can’t provide services that help grow or expand your business . The ideas behind how to increase the value of a business almost never seem to enter their minds because they simply don’t realize what kinds of opportunities exist within this niche market. Unfortunately, most businesses are sold because the owner wants to retire or move closer to family members and not due to any other factors such as poor management or a lack of clients which creates a very different process from large scale transactions involving multi million dollar deals.
18. It is rare for brokers to have access to the kind of information that you are looking for . This means that if you want to learn more about ways on how your company can be sold for as much money as possible, they won’t have any special tools or resources available to help them provide you with this type of assistance.
19. Brokers who specialize in selling small businesses, rarely have an understanding of what makes this industry unique . The differences between companies like yours and others within your specific niche market usually seem very confusing or even nonexistent which creates a lot of problems when generating ideas on how best to sell it at its highest price point possible.
20. A broker will often increase the value of your business by including their commission in the total price . This means that you will have to pay them a portion of your potential earnings which creates an extremely unfair situation for many business owners who want nothing to do with such agreements.