Can I Sell My Business Without a Broker?
Many believe every business sale begins with the help of a broker. You might be wondering, can I sell my business without a broker? It is one great way to help you sell your small business quickly, but it’s not the only method available. Think about selling your home. You could use the help of a real estate agent. After all, they’ll move your home on and off the market fairly quickly and for a (hopefully) good price. Their hard work, though, is rewarded with a percentage of the sale. You could also sell your home on your own, eliminating the cost of a real estate agent. Both methods work, and some are better in certain situations. The same is true of selling your small business. Working with a broker means having someone on your side to deal with marketing your company and handling the paperwork itself, but it also means paying them a percentage of your sale. Some charge as much as 10%. That’s quite a chunk of your overall profits.
Can I Sell my Business Without a Broker?
You can absolutely sell your company without the help of a broker. In some cases, it actually may prove incredibly useful. Working with a broker may mean avoiding delays. Potential buyers want lots of information about a company as you work to sell, and brokers often get busy and delay sending that information. When you’re working one-on-one with a buyer, though, you can immediately offer that information.
More than that, though, brokers just don’t know your company as well as you do. You built it. You understand the day-to-day operations. That means you’ll be able to pitch it well to a potential buyer and answer any questions he or she may have immediately.
But Should I Use a Business Broker to Sell My Business?
The difference between the answers to ‘can I sell my business without a broker?’ and ‘should I use a business broker?’ are different. Whether you can sell without a broker and whether you should sell without a broker is a critical one. You can absolutely sell without a broker, but using a broker does have its advantages. Without a broker, you’ll either have to pay for a business valuation or use a variety of data and formulas to determine what your business is worth and whether you’re asking a fair price. You’ll also have to market your company on your own, handle all of the paperwork, and find qualified buyers.
Working with a broker means freeing yourself from these responsibilities. It also means freeing up your time and using their strategies and resources to make your company’s selling price quite a bit higher.
If You Decide to Sell on Your Own
If you do decide to sell your business without the help of a broker, you have quite a bit of work to do. First, you have to work to enhance the value of your company. Buyers are looking for companies that are unique. Companies that have managed to achieve competitive differentiation have more repeat customers who recognize the value of the business itself. Businesses that sell well also have a good track record of sales growth, positive cash flow, and net profits as well as recurring revenue streams that will prove useful to a new owner.
When you’re ready to list your company, the next step is to gather the records. You need a balance sheet, an income statement, and cash flow statements for the last five years. You’ll also want a record of all of your contracts. From employment agreements to vendor contracts and leases, you’ll want to be able to show that you have all of your legal paperwork in order. Finally, have marketing research on hand.
An NDA is the next step. Have your attorney draw up an NDA, and as you work with each potential buyer, have them sign it before you begin handing over the most sensitive company information.
After that, it’s time to actually market your company. There are many sites that specialize in listing small businesses. Find one that works best for you. You may also want to talk to others in your network to see if they know about individuals who are interested in selling their companies.
As qualified buyers begin to get interested, be sure you work to learn more about each one. It’s fair to ask for a financial statement to be sure they actually have the ability to buy your business before you begin talking to them about whether this is the best deal for both of you. If it is, you can begin negotiating the price.
Making the Right Choice
So, can I sell my business without a broker? Sure, but it’s not necessarily recommended. At AMB, we work with business owners at every stage of the business lifecycle. If you’re ready to make a sale, but you’re not sure about the best way to go about it, work with us to learn more about whether a business broker is right for you.