Although there are many reasons to use a business broker, I will focus on just a few of the main reasons from my personal experience.
This is Part 1 of a two-part series that will address the reasons you need a qualified professional by your side.
Unfortunately finding buyers is not as simple as putting an advertisement out there. There are many moving parts and it can be very time consuming. Many times there are one or more attorneys involved, a CPA, family or financial partners – and showing all parties the information they want to see and satisfying all sides is not exactly easy. As an established business broker we already have a huge database of qualified buyers. Within this database of buyers we have already taken the time to go over financials, goals, types of businesses, nuances in certain businesses…we know exactly who to send a business to immediately. Our extensive marketing is able to target specific buyers using direct email campaigns, providing access to other qualified business brokers and their buyers, as well as canvassing CPAs and attorneys and their buyers. This gives a seller the great advantage of increasing the probability of finding a good qualified buyer, which in turn can maximize the value of your business. If I was estimating, I would say only one out of every 30-50 prospects is a qualified buyer for any particular business. Don’t try to wade through all those buyers alone, use our help instead.
I have a client that is trying to squeeze as much value out of their business as possible, and I can definitely understand and appreciate that as I would do the same. The issue is they are inquiring with many appraisers and brokers – basically they are looking for what they want to hear. My personal valuation was within 5% of an appraisal (mine was actually higher). There are brokers out there who will tell you what you want to hear, and there are also many tools that you will be able to manipulate to get to the valuation that you are looking for. Try to remember that the objective of a business valuation will be to properly price the business to get in the range that will generate interest from buyers. There will always be a difference of opinion on value, but from our experience when we are within 20% of value vs. asking we have had much greater success than when over the 10-20% range. When putting an evaluation together we have different valuation models, we have current market knowledge of what is selling, trends, time frames and more. We also have access to thousands of sold businesses to complete a proper valuation. It is not as simple as inputting a few numbers. It takes a full, comprehensive look at the business to develop an appropriate number. Anyone that gives you a value off the cuff or has a simple mathematical formula – these are not going to be very accurate.
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