Business Broker

Business Broker Benefits

Buying A Business can be a complicated process, especially if you don’t have a clear idea of the types of business you want to buy. That’s where business brokers can help. Most small business brokers sell businesses with net worths of less than a million dollars. This category contains mom and pops, family-owned businesses, sole proprietorships, retail shops, restaurants and small manufacturers. Brokers usually specialize in one type of business, or in just a few industries depending upon the area they work in. They offer several advantages and assistance:

• Help in determining fair market value of a business
• Have an inventory of businesses for sale that you can use to shop
• Assist with negotiation of purchasing agreements
• Help in closing the offer
• Maintain confidentiality of the sales process
• Technical expertise of pros and cons of businesses models they represent

Business Broker Disadvantages

Not all aspects of dealing with brokers are good. Conflicts may arise and it may be difficult to find a broker you can trust. Brokers are commissioned salesmen who have an eye on commissions, which means they don’t always have your best interests in mind. Most businesses that end up in the broker’s inventory for sale, are those that owners haven’t been able to sell for various reasons. Brokers can only sell those businesses they have in inventory. Sometimes they may stretch the truth a bit or embellish the “finer” points of a business. Others tell outright lies and attempt to commit fraud. Not all states require licensing for business brokers, and there are no federal licensing requirements. Check first with your state’s office of real estate as a place to start for information on your state’s licensing requirements, because the actual agency that regulates licensing may be totally unrelated to any agency you think should regulate this area, and you‘ll waste time on a fruitless search if you don‘t.

Evaluate Your Broker

When dealing with a business broker and before you enlist his aid with a contract, ask the broker for several references and the names of buyers that he or she has worked with in the past several months. Make sure you ask for names of business buyers in your industry or area of interest, so the broker doesn’t provide you with references he knows will give you glowing reports. You can also check with The Better Business Bureau, state attorney general’s office, department of real estate or department of corporations to see if there have been any complaints lodged again the broker, and if they have been resolved or not.

Locating an Expert

You can locate business brokers in the yellow pages, online, or get referrals from tax or business consultants or small business attorneys. Before you sign on the dotted line, makes sure you check out references closely. And make sue that the broker works full-time in his profession and isn’t a part-time wannabee looking to occasionally score a deal.