The simple definition of a business broker is a person who assists in selling and buying of a business. However, the broker does so much more. For instance, they act like a buffer between a seller and buyer. They are deal makers. Brokers have the freedom to honestly discuss the business deal with each side to create a fair issue for both parties.
A Broker Finds Businesses for a Seller to Acquire
A business broker is responsible for searching the business market for companies for sale that fit a buyer’s parameters such as size, location and industry. They typically charge a commission ranging from five to 10 percent commission of the company’s purchase price. This may sound like a high commission, brokers are invaluable during the negotiation process. They are especially valuable to first-time business buyers who aren’t sure how to proceed.
Brokers Pre-screens Businesses for Sellers
Brokers are often asked to sell various companies. Good business brokers Minneapolis MN turn down the opportunity to sell for two reasons. The first reason is that it is an overpriced business. The second reason is the seller refuses to provide the company’s financial disclosure. This allows a seller to avoid bad risks that come with acquiring an existing company.
These Business Professionals Help a Seller Pinpoint Business Interests
A buyer may know they want to own an existing business and that’s it. They may not know what type of business they want or if there is one that fits their interest. Business brokers help pinpoint a buyer’s interests and skills, so the right business venture is selected. Often, a buyer may discover an ideal business industry for them that they never thought about previously.
Business Brokers Can Negotiate a Business Transaction
Some buyers try to save money by hiring a broker in the middle of a business transaction such as when they are close to the final stages of negotiation. This is a fine option. During the negotiations is where business brokers earn their money. They assist both the buyer and seller in staying focused on the goal of transferring the business. Problems will often arise during negotiation phase the requires a broker’s help.
Business Brothers Know the Latest Regulations and Laws
A seller just wants to buy a company, not become proficient in business law. That is understandable. Business brokers know all the latest regulations and laws regarding permits to financing, licenses and escrow. Most importantly, they know how to get around all the “red tape” that comes with buying and/or selling a business. Having an expert broker to speed up the process and take months off the process of purchasing the business. Working with a business broker also reduces the risks of doing something wrong like skipping a step in the process or not paying a fee.
Hire a Business Professional Who Knows How to Buy and Sell Companies
A business owner wants to sell a business but doesn’t want to spend months trying to find a buyer. A buyer wants to acquire a business but does not want to spend time trying to locate the right company. Business brokers are the middlemen to find the business, bring the buyer and seller together and facilitate the transaction.