Business broker: why you need it and how to choose the right broker

Owning your own business is a dream of many people, but it is not always easy to achieve. It may be easier for a potential entrepreneur to acquire a ready-made business, but how to find and buy it successfully? This is where a business broker comes in.

Why do you need a business broker

Business Broker — is a professional who provides mediation services in the sale, purchase or valuation of a business.  First of all, business brokers are approached in order to quickly and efficiently buy or sell a business, since this task requires special knowledge and skills.

Business Brokers can also assist in estimating the value of a business, developing a strategy for selling or buying, preparing the necessary documents, negotiating and closing a deal. They know the market and have experience with various types of businesses, which allows them to provide expert advice and assistance in solving various issues related to the sale or purchase of a business.

The benefits of working with a business broker

• Expertise: — These are specialists in the field of buying and selling businesses. They have extensive experience and knowledge of how to close deals, evaluate businesses, find potential buyers or sellers, and other aspects of selling or buying a business.
• Shortening time: Business brokers can speed up the process of selling or buying a business. They take care of all the necessary preparation of documents and other materials, and can quickly find potential buyers or sellers.
• Privacy: Business brokers can help keep a transaction confidential. They know how to approach potential buyers or sellers to keep them anonymous and avoid leaks.
• Risk Mitigation: Business Brokers can help reduce the risk of buying or selling a business. They conduct a full due diligence of the business and help assess the potential risks associated with the transaction. This reduces the likelihood of problems in the future.
• Negotiation Assistance:Business Brokers can help you negotiate successfully with buyers or sellers. They know what questions to ask, what conditions can be offered, and what details to discuss. They can also help you negotiate terms and close a successful deal.
• Save money: You may find that business brokers can help you get the best deal to sell or buy a business, because they know how to get the best results for their clients. In addition, they can help reduce legal fees and other transaction-related costs.

How to choose a business broker

Choosing a business broker — this is an important step for the successful sale of your business. Here are some guidelines that can help you choose a reliable and professional business broker:

• Familiarize yourself with the business broker's website and pay attention to the convenience of the site and the information provided on the site. This can help determine how professional the broker is and how seriously they take their job.
• Research the broker's online reputation. Online reviews and recommendations from other clients can help you understand how successful the broker is in their work.
• Contact a broker by phone or in person to learn about their experience and approach to selling a business. Feel free to ask questions and get advice.
• Pay attention to how the broker responds to your questions and what documents and information they request. This can help you determine how professional and familiar the broker is with all aspects of selling a business.
• Learn about commissions and working conditions with a broker. This will help you understand how ready you are to work with this broker and what conditions you can expect in the process of selling a business.
• Finally, remember that choosing a business broker — this is a serious step that can have an impact on the success of selling your business. Therefore, choose a broker carefully based on their professionalism, experience and reputation.

What a business broker should know and be able to do

• Business brokers are only interested in selling legal businesses that do not have serious problems and are highly profitable with short payback periods. They also need a high intangible asset business that has been in business for over a year and has stable cash flow and a well-established financial history.
• Business Brokers are looking for a business that has a steady demand and an adequate seller, as well as an established price consensus.
• In order to become a broker, you must have financial literacy and experience in successful business sales. The broker must understand the current state of the business buying and selling market and be able to perform an objective business valuation using income and cost approaches. He must also conduct an analysis of the object and its pre-sale preparation, visit the object of sale and participate in every stage of the negotiations.
• A broker must be communicative, have extensive experience in negotiations with market participants and be able to organize a deal, leveling risks on both sides. He must also be able to pack a business, develop a sales strategy and select the best sales scheme for each specific transaction. The broker must know the mechanisms for finding buyers, be able to highlight the offer and generate excitement, understand the motivation of the categories of buyers, and also be able to convincingly talk about the business and constructively justify its value in the auction.
• The broker must be able to weed out pseudo-buyers and prepare documents for the sale, as well as advise on the payment of taxes and legal knowledge. An important requirement is knowledge of fraudulent schemes on the market, which will help to avoid them in the process.

What a business broker does not do

• A business broker does not seek business offers that do not meet its criteria.
• Does not agree to the terms of the seller without checking them, always works according to its own rules.
• Without concluding an agreement, a business broker does not start cooperation.
• Does not consider quoted price to be reliable without self-assessment.
• The Business Broker does not start looking for buyers until pre-sales is completed and does not incur advertising, travel, notarization or other costs.

Mistakes when choosing a business broker

The following errors are possible when choosing a business broker:

• Uncertainty about the purpose of the sale of the business. If the seller does not know why he is selling the business, he may encounter unforeseen problems when the sale process begins. The business broker should discuss with the seller his motives for the sale and help determine the specific goal.
• Experience mismatch. It will be difficult for a buyer to trust a business broker who is not experienced in selling a business in the same industry. For example, if you are selling a plant or business, you need a business broker who has sold such properties in the past.
• Lack of resources. If a business broker does not have enough resources to attract a sufficient number of potential buyers, this can lead to a decrease in the sale price of the business or even to a sale.
• Unethical behavior. A business broker who acts unethically can lead to serious problems such as misrepresentation, hiding information, defrauding buyers or sellers, default, breach of customer trust, etc. .
• Inappropriate communication skills. A business broker must be a good communicator in order to communicate effectively with clients and potential buyers. Failure to listen, understand and speak can lead to ineffective sales, communication errors and misunderstandings.
• Value mismatch. If the business broker and seller have different values, this can lead to difficulties during the business sale process. A business broker must be able to take into account the values of the client and work with them in order to achieve the best results.

How does the process of buying or selling a business using a business broker

The process of buying or selling a business with a business broker includes several steps:

1. Consultation and business valuation. The business broker consults with the seller of the business to determine the seller's goals and wishes, and to evaluate the value of the business. It can also help the seller prepare the business for sale.
2. Publication of an advertisement for the sale. A business broker creates an advertisement for the sale of a business and places it on the appropriate sites and resources.
3. Search for buyers. A business broker uses its database and connections to find potential buyers for a business. It may also use other methods such as advertising to reach more buyers.
4. Purchaser pre-screening. The business broker pre-qualifies buyers to ensure they can provide financing for the business acquisition and meet other criteria.
5. Negotiation. A business broker helps both parties to agree on the price and other terms of the transaction, negotiates and draws up a sales contract.
6. Completion of the transaction. The business broker helps to complete all the necessary documents and close the deal. It can also help with transfers and financial transactions.

In general, a business broker provides a full range of business buying and selling services that allow clients to make transactions without stress and risks. This work should be entrusted to the appropriate specialists. One of such professional teams operating in the international market, — this is Russian-Eurasian Business Broker (REAB).