What is a Business Broker?

A business broker is a company or an individual specialising in selling and purchasing small or main street businesses. These agents perform various tasks for their clients to help them acquire any business that is on sale. Business brokers are specialised in specific industries, have years of experience, or might harbour specific and unique characteristics to get the job done.

In this blog post, we will use buying and selling a business in Sydney, Australia to explain exactly what a Sydney business broker is and why you might need one.

Understanding How Business Brokers Work

Transferring the ownership of a company is a complex task. Among many obstacles a business broker must overcome, some are too complex to be achieved independently. These include determining the value of the business to be acquired, ensuring company financial records are in order, going through escrow and closing the sale.

Business brokers manage the prior stated steps and ensure confidentiality by requiring interested buyers to agree not to disclose any information of the potential business sale. Business brokers may work independently or through a brokerage firm. They can also help you with licensing and weeding out unqualified suitors.

Advantages of a Business Broker

Business brokers can assist in acquiring a new company without the headaches and sleepless nights. They are specialised in tax and legal implications cutting back on potential losses you might face without their help. Here are a few advantages of business brokers you wouldn’t have considered.

Maintaining Confidentiality

When you are selling your business, the last thing you want is your employees to know because it will cause chaos in the workplace. Therefore, business brokers require all potential parties involved in the sale and purchase of a business to sign an agreement that legally prevents anyone from leaking information. It’s a tough but necessary contract to prevent damages to your business and market reputation.

Buyer Qualification Process

When you sell or buy a business, you are too occupied to pay attention to who is making an offer. In the heat of the moment, you might end up making a deal with someone who’s only looking to collect information about your company. Business brokers ensure you deal with qualified buyers only. They will gauge the other party’s interest in your offer and determine if the buyer has the financial means to buy your business.

Advertising Your Offer

Business brokers are usually industry specialists with deep roots and connections. They know exactly where to market your business to attract qualified buyers. Moreover, they won’t leak any information about your company’s financial position to the market they advertise. Thus, business brokers maintain confidentiality while attracting qualified buyers through relevant marketing channels.

Accurate Appraisal

You might put an unfair price on your business due to personal biases, which leads to a lack of interested buyers. A business broker is a third-party focused on meeting your needs. In addition, business brokers maintain a record of business sold and purchased within specific industries making them more capable of appraising your business worth.

Better Negotiation

While a business broker might value your company several thousand or million dollars less than what you would have, that’s only a buyer attraction tool. Business brokers will negotiate a better deal without having you move from your chair. If you buy a business, your broker will cut down the price by putting credible, authentic, and valuable points during a negotiation. If you are selling, a business broker will try to get the best price.

Risk of No Payment

Business brokers mitigate the risk of no payment from the buyer’s end by serving as escrow. It’s their job to have the buyer disclose finances before meeting with the seller. This ensures you don’t waste your time on fake bids and find the right person to sell to.

Quick Sale

It is in the broker’s best interest to sell your business or help you buy one as soon as possible because their payment criteria are a percentage cut of the price you get or pay.  Therefore, expect faster results when dealing with a broker but don’t expect it to be as fast as buying or selling a car. It’ll take longer but not as long as it would take you to buy or sell a business.

Business brokers are an integral part of the business ecosystem. They facilitate acquisitions and mergers without leaking information and advertise to the right market. Things move a lot faster with a business broker because of their connections within their industry. Plus, you can focus on growing your business in the meantime so that you can make the best possible deal.