This article is one of a series that offers insight and guidance into the process of buying selling or valuing a business. Whether you want to buy, sell, or appraise the valuation of a going-concern business, these articles provide specific guidance and references to help you accomplish your goal.
For Business Buyers and Sellers: A Guide
by Tom West
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
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.
About the Author
||Mr. Tom West is the editor/publisher of The Business Broker, a monthly newsletter for the business brokerage field. He has written or co-written numerous books including the The Business Reference and Pricing Guide and The Resource Handbook for Business Brokers. He is a founder, past president, and former executive director of the International Business Brokers Association (IBBA). He is a frequent lecturer and seminar leader on all aspects of buying, selling, or appraising a business. Mr. West is probably the most knowledgeable individual in the country today concerning the issues of buying or selling small to mid-sized businesses.
If you're considering buying, selling, or determining the value
of a business, please take a look at some of the excellent books,
reports, and software we have at Business Book Press to help you
achieve success. For example:
The Business Reference and Pricing Guide is the bible of the business brokerage world. If you're a shrewd business buyer or seller, you will want this book to learn what just what the business broker knows. It will pay you big dividends throughout every aspect of the purchase and sale process. Learn more about it...
BizPricer Business Valuation Software is an accurate and inexpensive resource for prospective business buyers and sellers (and business brokers) who want to know the fair market value of a business. No financial expertise or specialized knowledge is needed. Save hundreds to thousands of dollars over hiring an appraiser to provide you with a similar result. Learn more about it...
Preparing A Business for Sale provides business owners with an understanding of the process they need to know to sell their business for the most money. Contains hundreds of little known tips, ideas and strategies to maximize the selling price of a business. Learn more about it...
Strategies for Successfully Buying or Selling a Business is our bestselling book. It has been recommended by Kiplingers Personal Finance Magazine, the BottomLine Personal Newsletter, and has been awarded the Best Business Book of the Year Award from the North American Bookdealers Exchange (NABE). Learn more about it...
Anatomy of a Business Purchase Offer provides you with all of the practical hands-on knowledge you need to make a successful purchase offer to buy a business. The author uses an actual Purchase Offer form to show you exactly what needs to be written and why! He details all of his recommendations in a line-by-line format for each and every aspect of the purchase offer. Learn more about it...
The Business Buyer's How-to Kit: We've assembled a specially-priced Kit with all of the key information you'll need to know to successfully buy a business.
The Business Seller's How-to Kit: We've assembled a specially-priced Kit with all of the key information you'll need to know to successfully sell a business.